Business community, represented by twenty chambers of commerce and industry throughout the country, unanimously opposed the government's proposal to replace General Sales Tax (GST) with a broad based value-added Tax (VAT) stating that they were not taken into confidence on this matter.
The government claimed in the fourth Letter of Intent (LoI) submitted to the International Monetary Fund (IMF) Board as a prerequisite to the release of the fourth tranche under the Standby Arrangement, "We have started consulting stakeholders on the VAT in a seminar held in September and participated by the members of the federal and provincial governments and supported by the IMF and the World Bank (WB)."
Members of chambers of commerce were also invited in the seminar. The President of the Islamabad Chamber of Commerce and Industry (ICCI) had opposed the proposed levy of a broad-based VAT and had threatened that the business community would not support the VAT. The government has committed to the IMF to implement VAT from July 1 2010 and the Prime Minister recently stated that the draft law would be tabled before the National Assembly soon.
"We will form a joint strategy to counter any move to impose tax on the business community which may take strike action or any other step it deems appropriate," said Kashif Shabir, President Rawalpindi Chamber of Commerce and Industry (RCCI) here on Tuesday. Kashif Shabir was addressing a press conference after the conclusion of the second All Pakistan Chambers Conference convened by RCCI under the aegis of Center for International Private Enterprise (CIPE).
Besides, Kashif Shabbir, President RCCI others present at the press conference included Rasheed Uddin Rashid, Senior Vice President, Karachi Chamber of Commerce & Industry, Yaqoob H. Karim, President, Lesbela Chamber of Commerce & Industry, Samina Fazil, President, Islamabad Women Chamber of Commerce & Industry, Muhammad Ishaq Butt, President, Sialkot Chamber of Commerce & Industry, Riaz Ahmed, President, Sarhad Chamber of Commerce & Industry, Mian Tariq Yaqoob, President, Sargodha Chamber of Commerce & Industry, Muhammad Akbar Khan, President, Tribal Areas Chamber of Commerce & Industry (NWFP), Abrar Saeed Sheikh, Senior Vice President, The Gujrat Chamber of Commerce & Industry, Sheikh Muhammad Siddique, CSR Chairman, Federation of Pakistan Chambers of Commerce & Industry, Faisal Iqbal Sheikh, Vice President, Lahore Chamber of Commerce & Industry, Javed Hussain, President, Gilgit Baltistan Chamber of Commerce & Industry, Abdul Qayyum, President, Faisalabad Chamber of Commerce & Industry, Muzaffar Saleem, Vice President, Rahim Yar Khan Chamber of Commerce & Industry, Malik Khawar Shahzad, President, Jhelum Chamber of Commerce & Industry, Idrees Ahmed Sheikh, President, DGK Chamber of Commerce & Industry, Sajjad Ashraf Khan, President, Haripur Chamber of Commerce & Industry.
"Chairman Federal Board of Revenue (FBR) had promised to hold a series of meetings with business leaders, but unfortunately these were held", Kashif Shabir accused. "Be it VAT or GST, business community will have to be involved. Why are we not being taken into confidence on this issue when we, as a community, are paying the greater part of a trillion rupees in tax", Kashif Shabir maintained.
Kashif Shabbir said that the conference was an RCCI initiative and reflected unity and co-operation among the chambers for nation building in particular and furthering the cause of all trade bodies in general. Business leaders during their deliberations identified and analysed issues directly or indirectly confronting them and proposed possible solutions for implementation by the Chambers and the government.
"We are committed to strengthening the business environment, which requires liberalisation and facilitation of economic activity with a view to making Pakistan a strong sovereign welfare state", he said. He added that at this crucial stage a joint strategy will be devised and the private sector must play an effective role to bailout Pakistan from the ongoing economic recession.
Responding to a question, Kashif said that RCCI is planning to hold single country trade exhibitions to be possibly arranged in Argentine and Brazil to penetrate this huge South American market. Chamber alone cannot do this hectic task and it needs help of government and other relevant circles, he added. He assured that every positive step of the government will be supported by the business community and in the best national interest business community can go to any extent.
Kashif dispelled the impression of any resistance in plugging smuggling by business community saying that there are some vested interests responsible for encouraging the menace. He urged the government to streamline the duty structure to discourage illicit trade of goods. To another question, he said that Saarc Chamber of Commerce and Industry (Saarc CCI) is also involved in the process of unity of the chambers all over the country.
He said that the 16-point declaration adopted in the conference would be polished, seeking input from all the chambers to get optimal results. Shabir said that under this new forum, joint initiatives would be taken to strengthen the private-public partnership. He identified 16-point joint declaration as demands and added that the following steps must be taken for economic growth of the country, to be referred to as 'economic update road map'.
The points are as follows: The Conference demands that a united Voice of Business Community 'representing all the four provinces, Gilgit-Baltistan and AJK' would be raised in the larger interest of Pakistan that declaration and for highlighting soft image of Pakistan in the world through Commercial Attaches to be appointed on merit from Commerce Trade Group.
The government should prepare the country's budget only through consensus taking the business community on board, the declaration reads. The business leaders also demanded that effective and mandatory Private Sector representation should be made in all government regulatory bodies, boards and committees related to business. They also demanded that the export refinance rate should be equivalent to LIBOR.
Kashif Shabbir informed the media that the business leaders in the declaration demanded incentives for expatriate Pakistanis to increase foreign exchange remittances to reduce dependence on foreign borrowings. These expatriate Pakistanis are sending remittance worth $8 billion per annum, which could be increased from $30 to 32 billion if incentives were given, ending dependence on foreign loans.
The declaration demanded of the government to reduce the non-development expenditures via improved governance machinery. An Effective Energy Conservation and Management based on relevant international standards be formulated in the country to cope with the current energy crisis. The energy projects based on comparative advantage should be launched. The declaration stated that women are 52 per cent of total population and without involving them in economic activities no development goals can be achieved.
The government should recognise and encourage women leadership in policy development, it reads. Youth (below 30 years), which are 50 per cent of total population should be involved in development process. And technical training institutions should be established and promoted in all districts to impart skills to youth, the declaration demands.
The declaration also demanded of the government to prepare all transit trade agreements in consultation with chambers. The government should take immediate measures to plug the parallel trade and smuggling, as it is causing huge loss to national economy besides, damaging the interest of businessmen who are paying huge taxes.