President American Business Forum (ABF) Salim Ghauri has welcomed the federal budget 2012-13 and expressed the hope that it would strengthen business activities amidst election activities ahead. He said the business community will benefit from reduction in turnover tax from one percent to 0.5 percent, as the profitability levels are extremely low to unprecedented energy shortfall in the country.
He also said that reduction in withholding tax on bank withdrawal by enhancing minimum limit to Rs 50,000 from earlier Rs 25,000 will also be helpful to many Small and Medium Enterprises (SMEs). Streamlining the Sales Tax at 16 percent on all segments, particularly the essential items, would also reduce the tax burden on common man, he added.
President ABF said increase in salaries by 20 percent, reduction in turnover tax by half, increase in minimum limit of bank withdrawals for tax deduction, enhancing the Income Tax exemption limit to Rs 400000 from Rs 300000 are major steps taken in the budget. He said in a situation when trade balance fiscal deficit, internal borrowing and rupee depreciation are in negative zone, it is the most difficult budget ever presented by the federal government. He said that energy shortage is the biggest challenge to overcome for the federal government ahead.
According to him, it is high time to meet the deficit of Rs 400 billion under the head of circular debt. He said the government has allocated a subsidy about Rs 184 billion in the budget but there is no clue how rest of the gap would be met with to overcome circular debt.
Salim said the budget is missing the growth strategy, which is a biggest need of the hour. The government should give a policy to attract investment and push the investors to bring money back to country. He said high interest rate has already plagued the economy and the government itself is the biggest borrower. He said there is a need to stabilise the rupee value in order to strengthen the economy.
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