PBC suggests removal of fuel subsidy

KARACHI: Pakistan Business Council (PBC) has recommended the government to withdraw the

general subsidy on fuel by replacing with targeted assistance through BISP by restoring fiscal prudence.

“Avoid further populist measures that also result in increasing the inflation,” PBC suggested the government. In a letter written to Prime Minister Shahbaz Sharif, PBC Chief Executive Ehsan A Malik asked the government to stem the pressure on forex reserves by reducing imports and raising regulatory duty on import of non-essentials.

He said regulatory duty on fuel imports was impractical and instead the government should focus on limiting import through conservation measures such “as work from home; early closure of commercial centres and wedding halls and rationing of fuel for private vehicles”.

“Don’t allow the country to experience the kind of challenges confronting Sri Lanka,” PBC asserted. The council sought to secure bilateral and multilateral funding for the country by reviving the International Monetary Fund (IMF) programme.

PBC urged for maintaining a competitive exchange rate by targeting REER in the 95-105 range and avoiding egoistic/unsustainable measures to prop up the local currency. It also termed the support to exports imperative and urged the government to continue with the regionally competitive energy tariff and other export incentives.

It also asked the government to come up with additional incentives for non-textile exports and to widen the geographical dispersion. PBC emphasised upon equitable taxation and proposed the government to accelerate the Federal Board of Revenue (FBR) reforms to broaden the tax base, and increase the advance and withholding tax rates on non-filers.

“Don’t burden existing taxpayers further and avoid knee-jerk revenue seeking measures that impact the long-term health of the economy,” it stated. It sought to review anomalies that arose from hasty changes to meet the claimed demands of the IM like multiple taxation of inter-corporate dividends and other anomalies in group taxation, tax credits for investment and other exemptions that still had time to run.

PBC urged for phasing down the inequitable minimum and advance taxes on the formal sector which raise the cost of doing business. As part of stable and competitive energy for industry, it recommended to liberate industry from legacies of past energy contracts, cross subsidies, system inefficiencies and theft and to fast forward the work on additional LNG terminals.