The American Business Council (ABC), welcoming the federal budget appreciated reduction of highest personal tax rate from 30 percent to 20 percent as well as increasing the minimum tax bracket from Rs 100,000 to Rs 150,000 (Rs 200,000 for women).
Commenting on the federal budget, ABC however maintained that the benefit of lower tax rates has been reduced by abolishing previously allowed exemption of house rent and utility expenses. In addition, ABC welcomes elimination of double taxation on excess perquisites.
In a statement issued here on Friday, ABC greatly appreciates government's efforts to involve all chambers and business forums in the budget preparation process. "In March this year, ABC had submitted its proposals to CBR and was invited in May by chairman CBR for a detailed presentation" it added.
"ABC feels that if the budget had also focused on reduction in corporate tax rates, elimination of excise tax on certain consumer items like shampoos and shaving preparation, and elimination of Workers Profit Participation Fund (WPPF) and Workers Welfare Fund (WWF) it would have helped government's efforts in poverty alleviation as well as in attracting foreign investment."
ABC was of the opinion that the cost of doing business is expected to increase as the manufacturing wage bill will rise and there are new items on which FED is proposed to be levied, like royalty payments, bank charges and foreign travel or increase on insurance services.
At the same time no major relief has been given to industry to offset these additional tax levies, it added. In addition, the responsibility to expand GST net has been shifted on companies rather than providing incentives to registered entities already in the GST net. If incentives are provided, they would help in attracting non-registered entities to register and help with the documentation of the economy, ABC opined.