Business community has expressed that prices of all goods produced in the country or imported will go up as a result of new taxation measures and increase in sales tax rate from 16 percent to 17 percent in the budget 2013-14 which will ultimately add to the miseries of general pubic. They were of the opinion that Federal Board of Revenue (FBR) has succeeded in implementing its desire to increase sale tax, which was being resisted by the business community for the last five years.
They opined that the budget carried no relief for general pubic. They said that one present increase in sale tax would cause increase in prices of all commodities. At the same time, federal excise duty has been imposed on essential items including ghee, sugar and vegetable oil, they added. However, they appreciated some of the measures adopted in the budget including tax holiday period of 5 years has been extended to 10 years to encourage investment in special economic zones, the rate of tax for non-banking companies reduced from 35 percent to 34 percent, duty and sales tax free import of solar submersible pumps, austerity drive in government department and ministries, and abolition of discretionary funds of ministries, eliminating circular debt in 30 days.
Leader of Businessmen Group (BMG) and former President of Karachi Chamber of Commerce and Industry (KCCI), Siraj Kassam Teli said that said that commenting on the budget without going into details was very default and it was too early. He added that it seemed the budget was 60 percent good as what he understood from the budget speech of Federal Finance Minister Ishaq Dar.
He pointed out that preparation of budget started months ago. "This budget is basically prepared by FBR and the new government has no time to examine it thoroughly and make major amendments due to paucity of time and it is not reflecting the vision of the new government," he added. He said on one hand finance minister claimed that tax burden will not be increased on the already taxpayers, whereas taxation measures indicate that taxpayers has been burdened.
He said that no efforts had been made to bring those into tax net who had income more than the exemption limit. FBR has already detected 7 lac such people and efforts should be made to bring them into tax net, he demanded. He said that heavy taxes have been imposed in the budget which would have very negative impact on general public, trade and industry.
Referring to increased in sales tax from 16 percent to 17 percent, he said that FBR was trying to increase sales tax since last many years and now it succeeded. "Increase in sales tax will have multiple impacts on prices of all commodities and these will go up manifold as businessmen will pass it on to the consumers," he pointed out. President KCCI, Mohammad Haroon Agar, said that after increase in sales tax inflation would increase.
He said that in preparation of budget business community was totally ignored and they were not consulted. Former President KCCI, Haroon Farooqui, was of the opinion that FBR has no capacity to implement measures suggested in the budget. He welcomed the announcement of bringing inflation to single digit, and measures proposed for youth and higher education.
Former President KCCI, A. Q. Khalil, said one percent increase in sales tax was an alternative of RGST to generate revenue. He recalled that few years ago IMF has suggested imposition of RGST and in recent past the caretaker government in shape of mini-budget made efforts to generate additional revenue of Rs 150 billion by increasing sale tax. These efforts were resisted by business community, he added.
Former Chairman, Federal B Area Association of Trade and Industry (FBAATI), Shahid Ismail said that the finance minister had negated his own statement of bring down inflation in single digit by increasing sale tax by one percent. He appreciated the announcement of sale of G-3 licenses and said that this issue must be expedited as it sale will bring around two billion dollars in the country. Senior Vice President KCCI, Shamim A. Firpo, said that the taxation measures proposed in the budget will bring a wave of price hike.
He said that those whose children are getting education abroad, maintaining luxury houses and car and contribution nothing in tax must be brought into the tax net. Former Chairman Site Association of Industry (SAI), Dr Ikhtiar Baig appreciated continuation of Benazir Income Support Programme. He criticised the increase in sales tax rate.
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