Aggressive taxation, high mark-up rate halted SMEs growth: SMEDA

LAHORE: Aggressive Taxation, harassment of tax departments, high mark-up rate and augmenting energy cost have ceased the growth of SMEs in Pakistan.

It was observed by representatives of the business community at a Pre-Budget Seminar held in chair with Farhan Aziz Khawaja, Chief Executive Officer of the Small and Medium Enterprises Development Authority (SMEDA) today at SMEDA head office. The seminar was addressed by a large number of business leaders including Adnan Jalil, KP Minister Industries, Muhammad Haroon, a Senior Office Bearer of Peshawar Chamber, Amjad Siddiquie, Vice President Quetta Chamber, Hamid Ateeq Sarwar, former federal Additional Secretary and Mehmood Khalid, Senior Economist of Pakistan Institute of Development Economics (PIDE), who made concluding remarks in end of the seminar. Whereas, Ms. Nadia Jehangir Seth, GM Policy Planning and Ms. Maryam Anas Ganaei, Manager SMEDA conducted the seminar as hosts.

CEO SMEDA Farhan Aziz Khawaja, while opening the consultative Seminar urged the participants to identify the crucial issues to be faced by SME sector in the prevailing economic crisis. He said, we should focus our attention to find out the solutions of the problems. He suggested considering the examples of Egypt and Sri Lanka, who had adopted viable measures to come out of the crisis similar to be faced by Pakistan at present. He assured that the recommendations given by the participants of this session would be taken up with policy corridors of Islamabad. He said that a meeting of the business community leaders in this context would also be arranged with federal Minister of Industries and Production.

The business community representatives expressed a common viewpoint that heavy mark-up rate, augmenting prices of energy and unbearable burden of multiple taxes at provincial and federal level had squeezed the margins of growth for industry. They appreciated that SMEDA was acting as voice of SMEs in the policy making corridors. They said that government should avoid making major decisions on taxation and regulations without taking the business community into confidence.

Muhammad Haroon, a representative of Peshawar Chamber regretted that tax concessions committed with FATA business community to promote SMEs had not been implemented. He suggested utilizing 2080 kilometers Afghan border linked with FATA for promoting bilateral trade between SMEs of the two countries.

Amjad Siddiqui, Vice President of Quetta Chamber of Commerce and Industry suggested making a strategy to explore plenty of the previous mineral resources available in huge land of Balochistan. He said that 42 registered minerals including Gold, Coal and Manganese can change the economic fate of Pakistan if utilized with the support of modern technology. He also urged to promote Agriculture and Livestock sector in Balochistan through modern techniques.

Mehmood Khalid, Senior Economist of PIDE, in his concluding remarks made a number of forecasts about the incoming fiscal budget. He suspected that future budget would bring a big cut in PSDP account and a huge increase in tax burden. He suggested that government, instead of increasing tax rate, should take measures to expand tax base. He told that a research had revealed that 45 lines out of 88 lines of Withholding Tax had made less than 1% contribution in the tax-net. So, these 45 lines should be removed from the list the Withholding Tax, he suggested and made the similar opinion about the distinction rule of Filers and Non-Filers. He observed that such distinction had created distortion in the taxation system and recommended to abolish this distinction in the coming Budget.

Copyright Business Recorder, 2023