WHILE the country’s businesses are struggling to maintain a constant growth due to the seemingly hostile environment, implementation of the VAT and SD Act 2012 which stipulates a flat 15 percent VAT will bring a nightmare to businesspeople. Fearing hard days ahead, the businessmen, as per a report of The New Nation, have asked the government to review the act considering the ground reality of high cost of doing business in the country. The government definitely is in a deficiency in revenue collection but undue pressure on businesspeople will not bring any good and may rather close several enterprises that eventually will create unemployment problems.
After paying regular corporate tax, VAT, and other duties and levies, the new VAT will decrease the competence of productions and mountain unbearable pressure on business people. In this backdrop, we suggest that the government create a business friendly environment to attract investments by slashing the existing tax.
If the act is implemented, it will create a huge negative impact on both manufacturers and consumers and ultimately affect the economic activities and squeeze the opportunities of new job creation. So, prior to the introduction of a new law, the authorities should take consideration of these ground realities. Even, the businesspeople have asked the government to reduce the VAT rate from the existing 15 percent to below 10 percent as in most countries VAT rate is below 10 percent. Though the government discussed with businessmen before enacting the act, their suggestions were not reflected in the act.
Business leaders said that the act seems to be unfriendly to business as it would be tough to comply with its various provisions. As the act goes against the interest of firms the business community has been opposing it since the introduction of the act in Parliament.
The unified VAT rate for all products and services will deal a heavy blow to small and medium business so businesspeople asked the National Board of Revenue (NBR) to carry out an impact assessment on the possible consequences of the new law prior to its implementation. The VAT has an impact on the competitiveness of businesses, social justice and employment. So, chambers leaders have asked the government to enact a friendly law for flourishing trade and business.
Despite deficit budgets and low revenue collection amid the volatile economy, messy governance and unbridled corruption which damaged business and decreased business competence in the country for the last several years, the flat 15 percent VAT for all goods and services will spell big trouble. In the comparatively “stable political climate”, the government must gain confidence from all quarters to make the economic growth stable and for that burdensome VAT is an impediment.
