Adviser to Chief Minister Sindh on Planning and Development, Dr Kaisar Bengali has emphasised on the need of re-defining state priorities and reducing non development expenditures. Speaking at a pre-budget seminar organised by Karachi Chamber of Commerce and Industry (KCCI) on Thursday, Bengali also laid emphasis on the need of reforms of fiscal state.
He said government is incurring heavy expenditures unproductively and is left short of finances for development schemes. "If government earns Rs 100 its non development expenses are Rs 120", Bengali elaborated. Dr Kaisar Bengali said that taxes levied on industries for GDP ratio is around 35 percent in Pakistan, which is extremely on the higher side as compared to other countries.
He was of the view that investor will not be encouraged to establish industrial units in a country where heavy taxes are imposed. In present conditions they are quite unlikely to risk investing here. He hailed industrialists for running businesses despite heavy taxes.
Giving an example of government's fiscal policy he said that heavy taxes were imposed on import of paper whereas printed books were exempted from taxes, consequently bearing negative impact on local printing industry. Many printers have ceased operations due to such problems in the last few years, he added.
Bengali said that funds have been demanded for development schemes, but there is a dearth of planing at federal and now at Sindh level. On the issue of Value Added Tax (VAT), advisor to Chief Minister Sindh on investment, Zubair Motiwala said that Sindh and Punjab governments have already rejected imposition of the proposed VAT.
He said that this tax would enhance corruption. Present literacy rates, tax collection infrastructure and other factors have also created problems in VAT collection and its implementation. Criticising powers of arrest delegated to tax collecting agencies in VAT bill, he said that arrest of VAT defaulter's wife and children is mind boggling as even in case of murder no such powers lie with law enforcing agencies to arrest wife and children in place of the absconder, said Motiwala.
Referring to Afghan Transit Trade (ATT), he said that ATT is damaging the local industry in general and SME sector in particular. He demanded withdrawal of Regulatory Duty (RD) imposed on different items and suggested that import of all raw materials should be allowed at zero rate. Chairman Taxation Sub-committee of KCCI, Qamar Usman suggested that imposition of VAT should be kept in abeyance for two years and in the meantime it should be discussed with all the stakeholders at length Usman suggested that duty on all imports under ATT should be collected at Karachi port and refunded at Afghan border.
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