Lahore Chamber of Commerce and Industries (LCCI) saw the Federal Budget 2006-07 falling short of the people's expectation and condemned the increase in Withholding Tax on cheque withdrawal.
While addressing the post-budget's reaction press conference here on Monday, LCCI President Mian Shafqat Ali said that the people were expecting much more relief from the budget in shape of fixed electricity rates and oil prices and reviewing the gas prices, which was expected to be increased next month. He was of the view that since gas was a local production, it should not have been linked with the international market. He also lamented the government for increasing the Withholding Tax on cheque withdrawal, which he saw anti-business step.
According to him, it was astonishing to hear withdrawal of customs duty on computer hardware since it had already been withdrawn last year. However, the LCCI oppose levy of 15 percent Sales Tax on it, which would have a negative impact on the IT industry that was on the take-off position.
The LCCI President condemned the increase in Sales Tax from 0.75 percent to 3 percent on retailers earning up to Rs 5 million, which was fully supported by other members of the Chambers present on the occasion; and said that this was against the government's claim of 'continuity of government policy.'
"The budget speech was more of a political speech, mastered by the State Minister, and left many issues unelaborated, hence it is hard to comment on the budget. However, the LCCI welcomes and supports the measures taken by the government for salaried class, pensioners and workers. We also support the reduction in Income Tax for salaried people and relief given to money in essential items, such as controlling the prices of lentils," he averred.
Shafqat Ali termed the budget as agriculture friendly and said that it was heartening to note the incentives given to this vital sector, including withdrawal of duties on import of tractors. He also welcomed the incentives given to the diary industry and Rs 12 billion subsidy given to the fertiliser industry, which would prove fruitful in future. He also saw the increase in CVT on stock exchange positive and believed that this would help in giving a boost to industrial sector.
He also supported Rs 1 billion subsidy for the poultry industry, which has suffered huge losses in the recent months. Change in the policy on import of cars was also a positive step, he added. He praised the government for introducing a policy that permits import of cars.
Mina Anjum Nisar, President of Punjab Economic Forum, said that after listening to unelaborated budget speech, he saw nothing that would reduce the cost of doing business, which was high at present and making the local industry uncompetitive in the international market. He cautiously saw the increase in interest rates of saving certificates; and added that this would enhance the cost of borrowing. He averred that so far he saw no relief for the business community in the budget and they would face problems in the international market. "We were expecting some kind of relief for the textile industry, in particular for the hosiery industry that was in deep waters, but the budget disappointed us," he added.
He welcomed the increase in the PSDP allocation, under which the country's infrastructure would improve. But it should be ensured that the allocated funds were fully utilised, as under utilisation was a normal practice of the government, he added.
Later, LCCI SVP Abdul Basit rejected the notion that the subsidy for poultry industry would benefit them that had to bear huge losses; in fact the government has offered them peanuts. He said that the government had not met their demand of exempting the industry from Income Tax for the next 10 years, which encourage investment.
Tahir Javed Malik, belonging to the auto-part assembler sector, said that decrease in CKD from 20 to 10 and CBU from 60 to 30 would have detrimental effect on the local industry, in fact it would be ruined and huge investment would go to waste.
Other members of the Chamber, including LCCI VP Sh. Aftab Ahmed Vohra, former LCCI President Mian Misbahur Rahman, Sh. Arshad, Irfan Qaiser, Tahir Javed Malik, Kashif Maher, Haji Yousaf, Majid Abdullah and Mubasher Sheikh, were also present on the occasion. They appreciated the government measures for the salaried class and workers. However, they believed that increase in salaries would not enough against the existing rate of inflation. They all were of firm view that they seen nothing for the industrial sector in the Budget 2006-07.
They also categorically condemned the increase in Sales Tax on retailers and said that small time shop owners would be ruined.