Federal budget draws fire from trade, industry

LAHORE: The federal budget 2017/18 on Friday drew mixed to negative reactions from the trade and industry sector, which, for the most part, remained under utmost pressure during the past four years. 

Abdul Basit, President Lahore Chamber of Commerce and Industry (LCCI), hailed the budget and the incentives announced for the industry including reduction in sales tax on import of poultry machinery from 17 to 7 percent. 

“The full waiver from sales tax on poultry machinery import would have been a better option,” Basit said welcoming the waiver in the duty on the import of grandparent stocks and reduction of duty on parent stock. 

He said these budgetary measures would go a long way in speeding up the growth of poultry sector in the country.

“The duty on spices (chemicals) used for processing poultry should also have been waived as processed poultry is imported at ‘zero rate’, which means that the said substances are also zero-rated,” said he. 

Terming it a major disappointment, the LCCI chief lamented that the sector did not receive any relief on raw material used in the manufacturing of poultry feed. “Feed is the major cost in poultry production,” he said. 

Shahzad Malik, former president Rice Exporters Association of Pakistan, said the decision of establishing warehouses in the importing countries would facilitate small rice exporters.

“It is dismaying to note the rice exporters did not receive any of the facilitations awarded to the five exporting,” he said adding despite decline in exports rice fetches highest foreign exchange after textiles.

Malik added that had the same subsidy been accorded to the rice exporters, the exports of the commodity would have increased by 20-25 percent. 

Mubasir Bashir, official at FINCA Microfinance Bank Ltd, deplored the continuation of super tax.

“This has effectively nullified the one percent reduction in the corporate income tax,” he said.

Bashir further said that the government failed to highlight the measures to be taken to close the gap between available resources and the expenses.

“Poverty, as such, has not declined as much as claimed by the government. Instead of depending on different surveys, the government should stick to the globally accepted formula of income of $2 per person per day,” Bashir said.  

Farooq Iftikhar, chairman LPG Association of Pakistan, regretted that the budget has not addressed the menace of substandard cheap LPG in the country.

 “The LPG production is in the hands of public sector. The Oil and Gas Regulatory Authority (OGRA) determines the well-head price of locally produced LPG and the public sector companies charge 5 year signature bonus in advance that makes the local LPG pricier than inferior imported LPG,” Iftikhar said. 

Furthermore, traders were not happy slammed the budget for making things more difficult for non-filers by targeting them through indirect taxes. 

Mian Ashraf, the former chairman Steel Melters Association also supported traders and asked the Federal Board of Revenue (FBR) to bring the non-compliant sectors to task through direct action.

“Businesses should not be burdened with the responsibility of collecting taxes from non-filers and then depositing it in to the exchequer.” 

Earlier, Finance Minister Ishaq Dar unveiled the last budget of the Pakistan Muslim League-Nawaz (PML-N) government with a total outlay of Rs4.75 trillion.

He set a target tax-to-GDP ratio at 13.7 percent of GDP, according to a prepared text of his speech.

The government has set ambitious tax collection goals for the 2017/18 fiscal year, which begins July 1, after falling just short of targets this fiscal year, according to the budget statement. The government projected it would expand tax revenue in 2017/2018 to 4.33 trillion rupees from 3.83 trillion rupees, according to the document. 

A fiscal deficit target of 4.1 percent of GDP for 2017/18 was also set. The current year´s fiscal deficit is estimated to be 4.2 percent, Dar said in the speech. That misses the original target of 3.8 percent.

Pakistan´s economy grew an estimated 5.3 percent in the year to July 2017 - short of the government´s 5.7 percent target but at the fastest rate since 2007 - amid a rise in agriculture output and steady service sector performance.