BMP asks govt to fix anomalies as budget has no incentive for trade, industry

Calls for paying early refunds to solve liquidity crunch, relaxing import policy for industrial raw material

ISLAMABAD   -    The Federation of Pakistan Chambers of Commerce and Industry (FPCCI)’s Businessmen Panel (BMP) has asked the government to fix the anomalies in the 2024-25 budget before its passage by parliament, as the budget has no incentive for trade and industry.

The FPCCI former president and BMP Chairman Mian Anjum Nisar urged the government to solve their problems on a priority basis in consultation with the traders, as the BMP’s mission was to create a stable economy and prosperous business community, he added.

He said that he sensed no appetite for reforms in the federal budget. He added that the incumbent government took some difficult steps due to the pressure of the International Monetary Fund (IMF). He also pointed out that the federal government made some announcements in the recent budget which lacked logic. He added that he was not criticising the government’s steps for ending the tax exemptions but the lack of logic.

He also called for promoting industrialisation and enhancing exports through lowering the cost of production, paying early refunds to solve liquidity crunch and relaxing import policy for industrial raw material. The Businessmen Panel (BMP) leader called for a growth-oriented budget for the trade and industry, suggesting the government to make visible reduction in taxes, helping revive the businesses in the country.

The FPCCI former president said that the his group in consultation with business community across Pakistan had finalised its budget proposals, which were sent to the relevant departments and called upon the government to incorporate them in the federal budget 2024-25 as their implementation would address the key issues of trade and industry, facilitate better growth of business activities, improve tax revenue of government and help in revival of economy, but nothing was implemented.

He stressed the need for reforming and simplifying the taxation system in consultation with the real stakeholders. Mian Anjum Nisar urged that the major focus should be on greater relief to especially documented and registered SMEs rather than new taxation measures. The FPCCI former president urged the authorities concerned to incorporate them in the budget, as their implementation would address the key issues of trade and industry.

He said that the government’s new measures seem to be inadequate to convince people to file tax returns due to arm-twisting by the FBR, creating unnecessary controversy due to continuous raids on business premises. He asked the government to enhance liaison with the business community with a view to broaden tax base and enhancing tax-to-GDP ratio, as the number of active taxpayers has declined.

He added that the hike in salaries of government employees from 20 percent to 25 percent would give an impact of around Rs1 to R1.5 trillion to the national exchequers amid a severe fiscal situation. He criticised that if the country is paying around Rs10 billion as interest then how was the administration justifying its step to hike the salaries of the government employees which would increase a huge financial burden on the exchequer besides soaring the expenditures of the provinces? While commenting on the federal budget, told that the budget seems to be like the previous one as the government is making efforts towards fiscal consolidation without very tight or expansionary steps. In line with the IMF guidelines, the federal government targeted a 1 percent primary surplus and a modest 3.6 percent GDP growth, unlike the previous governments which eyed 5-6 percent growth and later failed to achieve it. He praised the government’s intention for a gradual and modest recovery of the national economy as per the IMF’s aspirations.

However, he questioned the achievability of the government’s revenue target of Rs12.9 trillion despite the announcement of several tax exemption measures including the petrol-diesel levy, hike in taxes on cement, mobile phones, non-filers and others. He said that the federal government could easily collect Rs800 to Rs1,000 million through its new taxation measures, however, it needed to be precisely calculated to achieve the remaining Rs700 to Rs800 million. He said that the revenue targets set by the government were seemingly on the higher side, however, the administration would manage to meet the IMF’s 1 percent surplus target for Pakistan — which is around Rs1,100 to Rs1,200 million without the inclusion of 9.7 percent of interest — after curtailing PSDP and other expenditures like the previous government.

He expressed hopes that the government’s steps unveiled in the federal budget 2024-25 increased the chances of the country to pave the way for an IMF long-term plan which would help stabilise the currency and control inflation. He gave remarks against the federal budget in terms of the government’s taxation measures. He predicted that the imposition of taxes — from 40 to 45 percent on the sale proceeds — would hardly hit the country’s exports after lifting all exemptions. He also questioned the legality of the imposition of federal excise duty (FED) on the real state for taxing the trade of plots as no constitutional provision allows the government to adopt such a decision. He was of the view that the federal government should have unveiled a long-term plan for phase-wise expansion of the tax net.

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