KARACHI: The business community on Friday questioned a tax collection target of Rs9,200 billion proposed by the government for the financial year 2023-24, saying the target was “unrealistic” and would impede the country’s economic recovery. The PDM-led government presented the budget for FY24 with one eye on national elections in next few months and the other on the IMF bailout programme expiring this month.“The budget presents unrealistic picture of the economy; and, therefore, the targets set in the budget documents are unrealistic as well,” the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) president Irfan Iqbal Sheikh said. He was of the view that the target of Rs9,200 billion in tax collection for FY24 was not only difficult but would leave far-reaching negative consequences. “While this year the economic growth rate has dropped a lot to only 0.29 percent. So, how can more taxes be imposed on very little economic growth performance?” he questioned.
What’s important to think at this time is that the government is imposing new taxes; and, at the same time, increasing the tax volume – while not adding new taxpayers and not increasing the tax-net, according to Sheikh. “It does appear that the burden will be placed on those already included in the current tax-net. Until the interest rate, exchange rate, and petroleum prices are stabilised, the economy will not perform.” He appreciated that, on account of poverty alleviation, the amount of loans was enhanced from Rs1,800 billion to Rs2,055 billion in the budget 2023-24; solar energy for tube wells and duty on seeds abolished.
FPCCI president also welcomed a scheme for youth proposed in the budget. “Youth have to create their own employment and business in that manner as new institutions and businesses are not being formed. Fifty percent reduction in the tax rate for the youth is also welcome.” Tariq Yousaf, president of Karachi Chamber of Commerce and Industry, was of the view that the budget hadn’t offered any solution to bring down the prices of the electricity and provision of gas. Javed Bilwani, president of Pakistan Apparel Forum, said the budget proposals hadn’t addressed the issue of broadening the tax base. He deplored that the government hadn’t given any remedy to check the falling trend in exports. Faraz ur Rahman, Korangi Association of Trade and Industry chief, stated that the budget was not pro-business and growth, fearing that flight of capital would intensify from the country after the budget, as the sectors paying the taxes have been burdened further, according to Rehman.
Pakistan Business Forum (PBF) in its reaction to the budget proposals said, “The federal government has done too little, too late in terms of creating fiscal space for the revival of economic activity in its overhyped deficit budget of Rs6000 billion for financial year 2023-24, with the combination of 106 percent of debt servicing.” Ahmad Jawad, vice president and chief organiser of the PBF, was of the view that no serious efforts had been witnessed in the budget speech for the revival of the economy and Industry. “Rs200 billion additional taxes will be imposed from July 1st in the already unprecedented high inflation.”He raised questions on the exports target of $30 billion for FY24 despite over Rs100 depreciation of the local currency in a year and $32 billion exports target met in 2021. Jawad added that it’s a huge deficit budget because major chunk of the proposed budget would be account far for repaying back the loans and interest amounts.
“No concrete efforts were seen for the revival of industry in the proposed budget which is unfortunate. Similarly, tax slap on non-filers up to 30 percent in the real estate sector could also discourage the business activities,” he said. PBF in its statement urged that 10 percent proposed super tax on textiles and pharmaceutical sector should be reviewed. The forum also decried a 0.6 percent tax on cash withdrawal for non-filers, saying it would affect the use of banking channels. It also demanded a review on 18 percent general sales tax on daily consumable items. PBF appreciated the proposal of setting the minimum wage at Rs32,000.
Meanwhile, SAARC Chamber of Commerce and Industry president Iftikhar Ali Malik termed the federal budget 2023-24 in the prevailing scenario as “balanced, growth, and export oriented with a basket of attractive packages of incentives to accelerate the economic activities across the country.” Addressing a press conference, Lahore Chamber of Commerce and Industry (LCCI) chief Kashif Anwar hailed the abolishment of duty on machinery for solar panels. “The government should enhance the rates of net metering,” he said. Anwar welcomed the establishment of the Export Council. He was of the view that SME status in the information technology sector was a step in the right direction as the sector has the potential to earn huge foreign exchange for the country, according to LCCI chief. He wondered how the government would achieve the revenue target of Rs9200 billion, which was Rs7500 billion last year.
“The question arises as to how the deficit of Rs2000 billion will be met when no this taxes have been levied.” Former SAARC president Iftikhar Malik said it's established phenomenon that survival of a state mainly rested on a sound economy. He hoped that Pakistan would progress in every sphere of life following prudent economic policies.PBF vice president Jahanara Wattoo appreciated duty exemption on hybrid seeds including import of used combined harvesters. “Program of 50,000 agriculture tube wells will be shifted to solar is need of the hour,” she said. Wattoo termed the agricultural disbursement target of Rs2250 billion a positive step.