LAHORE/PESHAWAR/SIALKOT – The federal budget for 2018-19 has evoked mixed reaction from businessmen and industrialists. The business community of Khyber Pakhtunkhwa has rejected the federal budget for financial year 2019-20 and termed it as anti-masses, which will bring a tsunami of inflation after imposition of huge burden of taxes proposed in budget.
Speaking at a news conference after the presentation of federal budget, Sarhad Chamber of Commerce and Industry (SCCI) president Faiz Muhammad Faizi said that it apparently seems that imposition of number of taxes in the budget would further bring down foreign investment and will affect poor segment of society. He added the proposed increase of tax on sugar from 6 to 17 per cent, federal excise duty on oil/ghee, as well as 17 per cent tax on bakeries/confectioner items would directly affect poor masses.
Faizi said that no measures were suggested for development of small and medium enterprises in the fiscal budget. Similarly, he said that no reduction was proposed in the non-development budget and knowingly put burden of further taxes on poverty stricken masses.
He said that SCCI proposals were not incorporated in the federal budget, in which it had been suggested to extend tax-relief to people in settled parts of Khyber Pakhtunkhwa like tax-exemption given to PATA and erstwhile Fata. He also said that Khyber Pakhtunkhwa was completely ignored in the fiscal budget for financial year 2019-20. He said that there is nothing good in the budget as unnecessary taxes were being proposed.
The SCCI chief said that export volume had decreased, which would further fall with imposition of new taxes, adding the government also proposed imposition of taxes on retail sector, which would be difficult to run smoothly, and will also affect the poverty stricken people.
Meanwhile, the United Business Group (UBG) leader and industrialist, Ilyas Bilour said the prices of sugar, cooking oil/ghee, flour and other essential commodities will be further escalated which would directly hit the poor masses. Bilour called the budget for financial year 2019-20 is mere eyewash, which will bring a wave of inflation in the country.
Zahid Shinwari, the SCCI former president, said that taxes worth of Rs1400 have been proposed in the budget as per agreement with IMF. He said that funds of Rs925billion for Public Sector Development Projects (PSDP) have been proposed, which will halt the economic growth. He maintained that the new taxes have been proposed to reduce to budget deficit.
Meanwhile, Lahore Chamber of Commerce & Industry has termed federal budget 2019-20 as balanced despite economic hardships. Addressing a press conference after budget speech of state minister for revenue Hammad Azhar, LCCI President Almas Hyder said that various proposals of LCCI have been accommodated while finalising budget document. Flanked by Senior Vice President Khawaja Shahzad Nasir and Vice President Faheem-ur-Rehman Saigal, he said that zero-rate of duties on 1600 items including raw materials would reduce the cost of doing business.
“It is a very good step. It was proposal of all Chambers in the country”, Almas Hyder said. He said that after good reforms, current account deficit would be reduced from $12 billion to $7 billion. He said that government has allocated collectively Rs100 billion for dams/water projects that showed the seriousness of present regime. It would help get rid of water scarcity and would also help generate cheap hydel power. He said that privatization of public sector enterprises in losses was a good step as these were eating-up huge money of taxpayers. He also lauded increase in minimum wages, crop insurance and cut in salaries of the cabinet. He said that government should ensure early payment of refunds as delay was not only causing hardship to the business community but was also promoting trust deficit. He said that Assets Declaration Scheme was idea of the LCCI. Business community must avail this opportunity, he said.
He said that vehicle prices would go up after increase in excise duty that would affect auto industry development plan. On the other hand, Sialkot Chamber of Commerce and Industry (SCCI) has declared the federal budget for year 2019-20 as cut-throat for the Sialkot export industries. Talking to the newsmen here in Tuesday evening, SCCI President Khawaja Masud Akhtar termed the budget as totally disappointing for Sialkot exporters. He said that the government offered no relief for Sialkot exporters, adding that the abolishment of zero-rating regime for the export sectors would deal a blow to the already declining Sialkot exports. The Sialkot exporters, led by SCCI President Khawaja Masud Akhtar, lodged a strong protest against “what they called” the crushing budget in front of the SCCI.
He said that the Sialkot exporters will take to streets to roads to lodge their protest and reaction against the budget on Wednesday (today).
Meanwhile, All Pakistan Textile Mills Association (APTMA) acting chairman Naveed Gulzar has termed the federal budget an effort to increase revenue by almost 40 percent owing to stringent conditions from the IMF. He said the APTMA had proposed the government to bring down cost of doing business, ensure uniform and regionally competitive energy across the country, and minimum burden on liquidity of the industry.
He expressed his concerns that the prevailing interest rate regime would stuck up liquidity of the industry and removal of zero-rating regime by introducing 17 percent GST on the supply chain for the exporting sector would adversely impact manufacturing. He said the industry was not in a position to deposit Rs600 billion as input tax followed by its withdrawal in the shape of refund. The industry would get choke due to the scarcity of funds, he warned. He said a continuation of zero-rating would have far-reaching impact on the growth of industry as the industry was undertaking new investment initiatives to produce exportable surplus.
He said the government had agreed with the industry to impose 7.5 percent GST on the exporting industry but it has deviated from its commitment by imposing 17 percent. He has demanded of meeting the commitment with the industry in order to ensure its viability. Also, he said an increase in the turn over tax to 1.50 from 1.25 percent would hit the industry hard, which is already making huge losses. Furthermore, he said, the income tax refund of the industry has already been piled up with the FBR and the present raise would play havoc with the industry.
He said the industry hopes that the refund rules would be user-friendly and linked with a mechanism of refund immediate after the shipment. The exporting industry deserves the initiatives equal to the regional competitors. It is equally important to overcome the current account deficit and the government should come up with innovative ways to make industry viable and sustainable through a long term policy for local and foreign investors.
He apprehended that the short term measures to increase revenue would block the growth of industrialization in the country and only investment-oriented measures, including availability of raw materials, fast-track completion of Special Economic Zones (SEZs), an efficient refund mechanism against the exports and minimum adverse impact of taxation and their drawbacks against exports, would help increase exports.
The APTMA appreciates continuation of comparative energy solution for exporting industry for next six months and hope this to continue further under textile policy, he concluded.