‘Private sector’s part in budgetary homework pivotal for economy’

LAHORE: If policymakers do their budgetary homework for the next fiscal in concert with business community, the chances of economy’s gaining a much-needed growth momentum will become brighter, an industry official said on Monday.

“First off, energy tariffs must be uniform in all provinces as electricity and gas are basic inputs for the industry and their price fluctuations directly affect the cost of doing business,” Almas Hyder, senior vice president Lahore Chamber of Commerce and Industry (LCCI), said at a convention of top business leaders of the country.

“Moreover, all raw materials must come at zero or low custom duties.” Hyder said elimination of Regulatory Duties (RD) and Additional Custom Duty (AD) on raw materials was critical for the local industry to beat smuggling/under-invoicing and mitigate the effect of low tariff free trade agreements.

“Rate of duties for trade and industry must be same, so that SMEs (small and medium enterprises) should have a level-playing field,” the LCCI official said.

He also urged the government to reduce Custom Duties (CD) on intermediary products for enabling industry to import quality materials, components, and machinery at the same rate at which these were imported through different FTAs.

“Nonpayment of refunds is also drying out liquidity from the markets,” he added. Hyder said the exemption from Sales Tax on imported plant and machinery for Greenfield projects should also be granted to brown-field projects and for balancing, modernisation. and replacement (BMR).

He proposed that provincial governments should demarcate industrial and economic zones and set up special economic zones (SEZs) urgently. The business leader further suggested the foreign investment should only be allowed as a joint venture (JV) with Pakistani investors or as a public listed company so that local could also benefit from it. All existing industrial units should be regularised without penalty, he advised the government, adding warehousing of raw materials should be allowed in export processing zones (EPZs) and SEZs.

He said there should be One Tax Collection Authority for the collecting both federal and provincial taxes, while total number of taxes should be reduced to 5 by clubbing labour related taxes e.g. EOBI, PESSI, WPPF, WWF, Professional and Property Tax, Federal and Provincial Sales Tax.

“Taxpayers who deposit 20 percent more tax over the last year should be exempted from audit and exemption certificates to commercial importers & manufacturers be issued automatically if their withheld tax is equal to last year’s tax,” Hyder said.

He further suggested that discretionary powers under Section 177, 214C, 138, 175 of (Income Tax) and 40B, 25 37, 38A, 40 and 48 of Sales Tax be minimised in consultation with stakeholders. “There should be a single Audit for Sales Tax, Income Tax and Withholding Tax and all incomes must be treated and taxed equally,” he said.