Forthcoming monetary policy: Business community opposes move to increase markup rate

The business community has strongly opposed the move to increase mark-up rate in forth coming monetary policy and impose any new taxes to generate funds for reconstruction of flood-hit areas.
They were of the opinion that the economy already facing various ills and odds which must be cured and prevented, Government must give up the idea of imposing new taxes or increase interest rate otherwise, the dwindling pace of economic development would also impact on the slowdown and sluggish activities in the trading and industrial circles.
Nation has already heavily burdened due to various taxes, high bank interest rates, massive price hike, loss of jobs, frequent power and gas tariff increases and declining exports, no further tax and increase in bank interest rate would be accepted by the people and the trade and industry. They said that instead of minimising its own lavish expenditures, the present government resorts to levy taxes, increase interest rates and increase POL, gas and power tariffs, which is a brutal act.
Chairman Site Association of Industry (SAI) Salim Parekh said that it is high time that the government should adopt long-term policy. He said there is hint that State Bank of Pakistan considering to increasing bank interest rate by one percent in forth coming monetary policy. There is also different statements that government contemplating to impose flood tax to generate funds for reconstruction of flood-hit areas, discontinuing the zero rating facility of five sectors and imposition of Value Added Tax (VAT).
The frequent increases in cost of manufacturing have resulted in closure of hundreds of industries across the country and now the worst ever flood in the country has also destroyed uncountable industries due to which Pakistan's GDP is feared to go into negative digit, the SBP and government are making insane decisions, he maintained. He said all these news are very disappointing and it looks like that every department is working on its own and there is no co-ordination among different departments. Citing example of textile policy, Parekh said that the government announced very comprehensive textile policy but the implementation was nil. In the policy Research and Development (R&D) facility was announced and cheques were issued which were cancelled later on.
He said increase in bank interest rates will have serious negative impact on industries. He feared that non-performing loans would increase so that investors will not make new investment in future.
Chairman Federal B Area Association of Trade and Industry (FBAATI), Shahid Ismail opposed proposal to increase bank interest rates, imposition of flood tax and intention of the government to withdraw this zero rating of sales tax and implementation of Value Added Tax (VAT) on textile would be a step backward and ruin the backbone of the nation's economy.
He said that business community paying around 27 different taxes, including federal and provincial taxes and they are not in a position to pay any new tax. Referring to VAT and withdrawal of zero rated facility, he said that discontinuing the zero rating on exports would open floodgates of corruption and encourage large number of fake firms to make flying invoices and make trouble-free money which would be a massive loss once again to the government.
Chairman Korangi Association of Trade and Industry (KATI) Razzak Hashim Paracha said that trade and industry could in no way bear any further tax or levies or increases bank interest rate and in utilities as they already become out of proportion.
He agreed with all renowned economic experts that due to massive floods and loss of huge crops, the country would have to face a severe shortage of commodities and government would have to contain not only its lavish expenditures and unstoppable borrowing. He urged the Governor SBP Shahid Hafeez Kardar to reduce two- percent interest rate in the forthcoming monetary policy and then gradually bring it to single digit so that economy would be able to sustain and industry could breathe.