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June 13, 2020

Business community disappointed as industries ignored

Business

 
June 13, 2020

KARACHI/LAHORE: The business community on Friday expressed disappointment over the federal budget 2020/21, which comes sans any incentives to spur industrial growth, and ignored the entire industrial sector’s demand of restoring ‘no tax no refund regime’.

“Extraordinary steps were needed to overcome extraordinary challenges in the post-COVID arena,” Irfan Iqbal, president of Lahore Chamber of Commerce and Industry (LCCI) said, addressing a post-budget press conference.

“The government did well by presenting a tax-free budget, but no special package has been announced in the budget to boost exports and to remove the hurdles that are hampering the growth of exports sector,” said Iqbal. “No policy has been announced to reduce energy cost that is one of the biggest reasons of high industrial input cost.”

Manzur Malik, former president of Sheikhupura Chamber of Commerce and Industry said the budget was loaded with hollow commitments.

“No steps were announced to ease the cost of doing business. Issues related to advance taxation and unnecessary length of documentation were ignored,” Malik said. “Due to COVID-19 many industries are closed and finding it hard to restart. The banks are reluctant to rescue them.”

Industrialist Ikhtiyar Baig also termed the budget a directionless “wherein no incentive was announced to spur industrial growth, which is estimated to be around 0.7 percent next year”.

“The industry is shocked the proposal of restoring ‘no tax no refund’ mechanism was not announced. It may be because of IMF’s pressure. It is a big disappointment for the export oriented industry, as exporters’ cash lines have dried up and we cannot pay 17 percent sales tax and then wait months for the refund.”

Shahzad Azam Khan, ex-chairman of Pakistan Hosiery Manufacturers Association commended the government for its stance on sales tax regime for exporters. “Refunds are being promptly made,” he said.

Iqbal of LCCI appreciated the allocation of funds for power and water projects and agriculture sector, exemption of additional custom duties, reduction of customs duty and reduction in regulatory duty on smuggling-prone items.

Yasir Mehmood, former chairman of the Lahore Stock Exchange said everything would now depend on how situation unfolds on COVID-19 front.

“Overall there is no radical deviation from last year,” s aid Mehmood. “Government appears alive of constraints.”

Mustafa Kamal Pasha, former chairman of Pakistan Poultry Association said the budget has not announced any measures to increase the income. “Poultry sector has always been neglected by the policy makers although it has the potential to become the largest foreign exchange earner.”

Ashraf Bhatti, central president of Pakistan Anjuman Tajran said the government did not accept the budget proposals of traders and has even continued with the condition of CNIC and withholding tax.

Baig said the Federal Board of Revenue’s target is a very ambitious given the economic situation of the country amid global pandemic.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) termed the federal budget 2020-21 a corona-oriented balancing budget, as no new taxes have been imposed and costs of imports are reduced.

Zakarya Usman, senior vice president of FPCCI said most of their proposals had been incorporated in the budget adding, “We have not received the details regarding exceptions and reduction in import duties, and we will express our comments once we get all the details.”

Usman appreciated the proposal of increasing the exemption limit for submitting CNIC to Rs100,000 worth of purchases against the existing value of Rs50,000. “We had been proposing to increase the exemption limit since long, and now the government has done it.”

Usman said this was not a revenue budget, and the proposals would facilitate the business particularly small and medium sized entrepreneurs. “Reduced duties and taxes on raw material import would facilitate import substitution and bode well for the economy.”

Businessmen Group Chairman said Siraj Kassam Teli said this could not be considered a relief budget. Teli said it is not a relief budget. “It is true that no new taxes have been imposed, but some of the existing taxes have been increased and some are decreased.”

Teli said the budget did not announce any relief for the entire business community including SMEs, and small traders. “It should have been a relief budget. Government should have reduced taxes and provide relief on utilities and other levies.” He appreciated incentives for construction and tourism industry, but criticised that other sectors were left unattended. “We will be able in a better position to comment once all the details regarding increase/decrease in taxes and duties.” Karachi Chamber of Commerce and Industry President Shahab Ahmed said government set ambitious targets of GDP growth, revenue collection, industrial growth and agriculture growth, which would not be achieved.

“The entire world is going through a recession and Pakistan is no exception. Government should have given a thought to this reality.”

AQ Khalil, general secretary of Businessmen Group said the government was proposed to cut the tax rates by 50 percent for one year in order to ensure economic recovery after losses due to coronavirus. Ibrahim Kasumbi, former senior vice president of KCCI said the chamber proposed reduction in sales tax to 8 percent from existing 17 percent. However, sales tax rate was reduced to 12 percent from 14 percent only for taxpayers required to install point of sale. Targets set for next fiscal year may not be achieved due to adverse impact on the economy. The government has not taken measures in the budget which may provide jump-start to the economy. “The government is not seen in position to take risks,” he added.