The business community has shown mixed reaction over the budget announcement and termed it 'investor and masses friendly budget', however, textile and its made-ups exporters and small traders have criticised the same as they see no relief for them.
Former President Karachi Chamber of Commerce and Industry (KCCI), Zubair Motiwala said, "The increment of 0.2 percent tax from 0.1 percent levied on bank transactions on withdrawal of minimum Rs 25,000 is unjustified."
He highlighted that the government should not have increased tax on banks' transactions. Motiwala said that it seems that the government has announced another camouflaged budget and some hidden taxes would also be slapped later on.
He said that the government had not announced incentives to the textile sector and the country's exports during the fiscal FY07 could face plenty of hardships on the international front.
The business community has also criticised the figures announced by the Minister of State for Finance, Omar Ayub Khan that the Foreign Direct Investment (FDI) into the country has reached to $3.02 billion.
"If FDI is coming rapidly and the local industry is succumbing to it, then how could we say that the economy of the country has been strengthening with the passage of time," said Atiq Mir, Chairman Alliance of Marketing Associations Karachi.
"In fact, we were expecting that the government would waive off this tax (on bank transactions), but its has now been doubled," said Shabbir Ahmed, Chairman Pakistan Bedwear Exporters Association.
He said that most of the industries pay salaries to their employees in cash as every industry has employees on daily wages.
Shabbir Ahmed has also criticised the federal budget, which, he said, has no attraction and incentives for the textile exporters.
"We (textile made-ups exporters) are not on the priority list of the finance ministry," he denounced.
He pointed out that EOBI charges have also been increased besides the announcement that Rs18 billion would be collected through gas sales during the next fiscal which hints that the government might raise rates in the future.
While announcing the current fiscal year's budget the government set a target of Rs16.6 billion.
He alleged that the government had announced a budget which would help inflation to escalate further.
"The announced subsidy of Rs 2.5 billion on import of pulses does not clarify the whole picture," said Anis Majeed, Advisor to Karachi Wholesale Grocers Association, adding that the government should properly announce the details of the subsidy because the commercial importers are perplexed that as to how they would enjoy this subsidy or not.
Vice Chairman of Association of Pakistan Motorcycle Assemblers, Muhammad Sabir Shaikh termed the budget 'favourite' for the automotive industry.
"The government has finally announced the implementation of Tariff Based System (TBS)," he optimistically said, adding that the said implementation would start healthy competition in the auto sector.
"I think now everyone would become price and quality competitive and the companies would now launch more models and designs besides luring handsome investments," Sabir Shaikh added.
The prices of pulses are likely to be slashed to half following the government's decision in the federal budget to provide subsidy to import lentils.
Raees Ashraf Tar Mohammad, chairman, Pakistan Importers Commodity Association said that the government announced a budget with a total outlay of Rs 1.3 trillion which is highest ever.
The government has fixed a target of Rs 840 billion which is almost double the budget size of the country a decade ago.
The government's decision to allow subsidy to import pulses and sugar is a bold step and the country has ample foreign exchange reserves and the growing economy could bear this kind of relaxation.
The prices following the Rs 10 per kilogram susbidy would certainly help slash the prices of pulses in the coming month. The prices would go down not only at the utility stores but also in the retail market.
The decision pertaining to sugar would curb any speculation at the retail as well as wholesale stage and the prices would remain at affordable level during ramazan and start of the new crushing season.
Former President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Tariq Saeed said that initially he can say it is a 'people- friendly' budget.
"We always advocated for broadening the tax net" he said adding that imposition of two percent of CVT in real estate sector would bring this sector in the tax net.
Every person who gains should pay tax. He said that announcement of availability of dal, sugar and other commodities on control rates was good news but these should be available to the common man at the announced rates.
Former Vice President of FPCCI, Eng. M. A. Jabbar said that the tax net would broaden in this budget and it is expected that the CBR would be able to achieve new targets of collection.
Regarding the announcement of availability of commodities at control rates he said that the past performance of Utility Stores was not satisfactory.
The government should institutionalise the system so that common man could benefit from it.
He appreciated the announcement of 15 percent dearness allowance for salaried class. He said that the exemption of Income Tax up to Rs 150,000 is not enough. It should be up to Rs 200,000.
Regarding imposition of two percent CVT in the real estate sector he said, the tax net would broaden and this parallel economy would be get into the tax net.
According to him the imposition of two percent of CVT was not enough. The CVT should have to impose some higher than the announced rate of two percent, he added.
Akbar Abdullah, Vice President Federation of Pakistan Chambers of Commerce and Industry said that no announcement was made in regard to export sector in the budget.
Zakria Usman, chairman, taxation committee, Federation of Pakistan Chambers of Commerce and Industry , Rehamatullah Javed, chairman, standing committee on SME & Self Employment also termed it a good budget which would give some relief to the salaried class.
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