Businesses seek pro-growth budget to prevent industry closures, job losses
May 24, 2023
May 24, 2023
ISLAMABAD: Finding it extremely difficult to survive amid dwindling foreign exchange reserves and import curbs with a weaker rupee and unprecedented inflation, the business community has sought out-of-the-box solutions in the upcoming budget to prevent industry closures and job losses.
During a meeting with the Senate Standing Committee on Finance and Revenue on Tuesday for discussing budget proposals for the upcoming fiscal year, the business leaders proposed a pro-growth budget to restore investor confidence and strengthen the role of the manufacturing sector, especially export-oriented industries.
The committee, led by Chairman Senator Saleem Mandviwalla, reviewed different suggestions put forth by the trade and industry representatives for incorporation in the upcoming budget broadly asking for lowering of tax rates and improving the business environment to revive the economy.
Pakistan Business Council CEO Ehsan Malik informed the committee that the top 100 businesses in the country contribute significantly to exports, accounting for 40pc of total exports. These businesses also contribute 20pc to GDP and pay around 56pc of the total taxes collected.
Senate panel reviews proposals for next budget
Mr Malik suggested the implementation of a fair tax system, along with measures to facilitate business operations and reduce manufacturing costs.
Representatives from the other chambers of commerce and industries agreed unanimously on the importance of expanding the tax base and urged the withdrawal of the super tax, ranging from 1pc to 10pc, imposed on affluent individuals and companies. They also emphasised the need to review the Afghan Transit Trade Agreement.
In addition, Faisalabad Chamber of Commerce and Industry president Dr Khurram Tariq suggested that small businesses with a turnover of approximately Rs150 million should be exempted from the computerised balloting for a sales tax audit. He also proposed that the audit process for these businesses should be completed within six months instead of the current five-year timeframe.
Dr Tariq explained that these measures would promote the growth of small businesses and ultimately increase their productive contributions to the economy.
On the other hand, Islamabad Chamber of Commerce and Industry president Ahsan Zafar Bakhtawari highlighted an issue regarding the exemption of sales tax for industries in the erstwhile Federally Administered Tribal Areas (Fata).
He pointed out that this exemption puts steel industries in settled areas at a significant disadvantage. Mr Bakhtawari suggested the withdrawal of this exemption to establish a level playing field where industries on both sides can thrive equally.
Karachi Chamber of Commerce and Industry representatives expressed their concern over the imposition of a 3pc value-added tax (VAT) on imported raw materials, deeming it unjustifiable and calling for a reassessment of this policy.
They also highlighted the significant challenge posed by the requirement of providing Computerised National Identity Card (CNIC) information for transactions with unregistered buyers, as a large portion of buyers in the country remain unregistered.
Additionally, they pointed out that registered suppliers are burdened with an additional 3pc tax when providing goods to buyers who have provided their CNICs.
According to the representatives, imposing this tax on registered sellers lacks a reasonable basis and should be eliminated.
Moreover, representatives from Coca-Cola beverages revealed that Pakistan is the second country, after Saudi Arabia, where beverages are heavily taxed. They expressed concern that the recent increase in Federal Excise Duty has resulted in a significant decline in sales, estimated at around 25pc. They proposed a reduction to 4pc from the current 20pc FED on beverages.
Afaq Ahmad Qureshi, a member of the Federal Board of Revenue (FBR), informed the standing committee that the FBR has received recommendations from all stakeholders. Deliberations on these proposals have already begun, and the FBR will provide updates to the standing committee accordingly.
Published in DawnDownload