In the budget proposals for 2021-22 released today by ACCA (the Association of Chartered Certified
Accountants), the global body for professional accountants has urged the government to reduce
tax rates to a single digit and ensure broadening of the tax net by adopting Data Analytics and
Artificial Intelligence leveraging rich data sources at the government’s disposal such as NADRA.
The proposals also talk about the importance of moving away from indirect taxes and calls for
rationalisation, standardisation and automation of tax laws; administration to minimise
harassment of taxpayers.
The suggested structural reforms include harmonisation of federal and provincial tax laws,
issuance of a single tax return, reduction in the discretionary powers of tax authorities,
predicating appraisals of FBR functionaries on growth of business sectors under jurisdiction to
instil a mindset of using tax as a means for GDP growth, incentivising tax payers to promote a
tax culture, and establishing an independent appellate forum at Commissioner Appeals level.
The proposals also hope for the government to have a long-term strategy for import substitution,
call for more incentives to local industry and favours heavy duties on non-essential imports and
luxury items. Tax benefits to businesses pioneering UN’s SDGs have been recommended.
The negative growth in sectors such as mining and quarrying (-6.49%) and electric generation (-
22.96%) is also highlighted for the government to take immediate action.
It’s stated that agriculture (recently growing at 2.77%) has the potential to reach up to 55% of
the GDP from the current levels of around 24%. For this to happen, there’s a need for large
landowners to be taxed at minimal rates, i.e. 7%. The revenue generated through this should be
used to subsidise seeds, fertiliser, water, electricity, fuel, etc. for the small farmers. The use of
latest, sustainable farming technology and easy access to cheap or interest-free loans should
Proper legislation and rationalisation can help improve the situation for mining and can also
result in attracting FDI. Focus on bringing down line losses, improving energy mix with clear
plan for transition to renewables, as well as revising the existing costly agreements, can help
reduce the negative trend for the electricity generation.
The document lauds government’s interventions such as Roshan Digital Account and incentives
to the construction sector and mega projects such as Ravi Riverfront and calls for their
continuation and further enhancements.
The global body has shown concern about the growing unemployment (11.56%) among the
youth aged 20-24 and urges government to make youth employment one of the focus areas
with considerable spending in the budget 2021-22. Further innovations in the Kamyab Jawan
programme and the introduction of new skills development and entrepreneurship support
programmes with focus on emerging technologies should be government’s priority.
Significant increase in education budget with new programmes by provinces to support girls’ education, as
well as adequate spending towards health and communications infrastructure, has been termed
the ‘need of the hour’ by the global body. ‘
Facilitation of high broadband penetration is critical for the future-fitness of our education sector and public services delivery,’ said ACCA. Segmented approach in programmes such as Ehsas to ensure benefits reach the most
marginalised segments of community across the country should be adopted for an inclusive
growth. Close collaboration with the IT/ITeS sector is needed, and the sector should be offered
with tax rebates to facilitate its expansion. Similar to CPEC, it’s believed that there’s a potential
for something like ‘China-Pakistan Technology Zone’ to connect our innovation value chain with
economies in the region.
It’s also pointed out that the past outstanding refunds have only been cleared partially. It’s
important to strengthen the trust of the taxpayer as well as provide liquidity to businesses,
especially at a time when businesses are recovering from the effects of the pandemic.
It’s reiterated that government needs to ensure openness and transparency to foster trust and
cultivate a healthy tax culture in the country.
ACCA has also confirmed that it will be holding a number of seminars to discuss its budget proposals for 2021-22 engaging country’s top business leaders and policy makers.