Traders of federal capital have strongly opposed the government’s plan to enhance the taxation rate for Associations of Persons (AOPs) and small companies in the forthcoming budget from the current 20 percent to 25 percent as it will send these businesses into further troubles.

Speaking in a meeting at Islamabad Chamber of Commerce & Industry (ICCI) they said that AOPs and small companies are the backbone of Pakistan’s economy and increasing tax rate for them will create more problems for these businesses in maintaining their survival.

They said instead of taking measures to strangulate these small business entities, government should reduce tax rates for them to accelerate their promotion. They said growth of small businesses will create multiple benefits for the country  including creation of more job opportunities, reduction in poverty, expansion in economy and broadening the tax base.

Chairing the meeting, Zahid Maqbool, President, ICCI said that the proposed increase in tax rate for AOPs and small companies will not serve the interests of economy as it will promote the culture of corruption and tax evasion, which will cause more reduction in tax revenue.

He also opposed the high rate of proposed value added tax (VAT) which will take inflation to new heights. He said VAT rate in India is 12.5%, in Indonesia , Korea, Philippines & Veitnam 10%, in Thailand 7% while in Japan & Singapore it is just 5%.

He stressed upon the government that if enforcement of VAT is unavoidable for Pakistan, it should be introduced at a reduced rate instead of 15% to save people from the pains of inflationary pressures.