Low oil price benefit should be transferred to end-consumers

Islamabad: The government must ensure tax relief and reduced cost of business while announcing Federal Budget 2020-21 to save the small and medium business and industry from a total collapse.

This was demanded by experts from economy at an online ‘Pre-budget public-private dialogue amidst measuring the impacts of COVID-19,’ organised by Sustainable Development Policy Institute here Wednesday.

Speaking on the occasion, Saud Bangash, Resident Director, Pakistan Business Council, said that zero-rating facility for the exporters must be reintroduced in addition to lowering GST rates in the present circumstances. He said that the minimum turnover tax is also regressive and will hurt smaller businesses further.

Ibrahim Kasumbi from Karachi Chamber of Industries and Industry said that the low oil prices benefit should be transferred to end-consumers in the form of reduction in electricity tariffs. He said that all irritants in tax regime which have led to increase in informal sector and cash-economy should be revisited. Earlier, Dr Abid Qaiyum Suleri, Executive Director, SDPI, informed the participants that Rs1.5 trillion of COVID-19 related support for the business and industry is on the card and would be formally made part of the budget for the next fiscal year.

The situation being unfolded by the pandemic signifies the importance of promoting agriculture and ensure food security, Dr Suleri said adding that timely support to farmers could play key role ensuring that no future food shortages and food inflation.

Mona Mehfooz from Sindh Revenue Board acknowledged the importance of promoting online enterprises when social distancing has become an imperative due to the pandemic. She said that exploring the potential of export processing zones (EPZs) and how bringing more efficiency to EPZs could help the private sector is important to boost the economy.

Shahid Khan, representing the State Bank of Pakistan briefed the participants that the central bank is in touch with all commercial banks to fulfil borrowing needs of the private sector.

Dr Vaqar Ahmed, Joint Executive Director, SDPI, presenting the research conducted by SDPI said that medium term tax relief should lock direct and indirect tax rates at a lower level for micro, small, and medium enterprises. Besides, the competition regime may be strengthened by removing lacunas in investment laws and policies for inviting foreign capital inflows.

He continued that COVID-19 presents an opportunity for enterprises in digital space. Budgetary interventions for such firms offering online services and freelancers could be strengthened. Looking beyond relief phase, he said, the recovery phase should involve helping businesses significantly reduce transactions costs and tax and regulatory burden needs to be rationalised. The government should also subsidise information, networking, and marketing costs of Pakistani enterprises, he concluded.