Islamabad Chamber of Commerce & Industry (ICCI) has opposed the government’s new move of expanding the scope of withholding tax to all banking transactions through an amendment in Finance Bill 2010 as it would adversely affect the growth of business activities.

Mr.Zahid Maqbool, President, ICCI said that government has put extra burden, particularly on small businesses and people by authorizing every banking company, non-banking financial institution, exchange company or any authorized dealer of foreign exchange to collect 0.3 percent advance tax on all banking instruments including Demand Draft, Pay Order, CDR, STDR, SDR RTC etc.

He said the expansion of advance tax from cash exceeding Rs.25,000 a day to all banking transactions would promote the culture of tax evasion as it would force people to prefer settling their accounts through informal channels to avoid tax.

Mr.Zahid Maqbool said this step would be a deterrent to the documentation of the economy and would also discourage the mobilization of bank deposits, producing negative consequences for the economy.

He said government should not convert banking companies into revenue collecting instruments as these companies are basically established to serve as intermediaries between savers and investors.

He said our country needs to encourage the culture of savings for promoting new investment, but such unfavorable steps would adversely affect the savings and would further diminish the economic prospects of the country.

ICCI President said that government should adopt more practical measures to improve tax revenue and tax all exempted sectors including agriculture instead of preferring easy modes of tax collection, like levying taxes on oil products and bank transactions, which put unnecessary financial burden on businessmen and the common man