With the coming up of SRO and details of the budget 2011-12 the business community which were earlier terming the budget as balance budget in present circumstances have changed their observations and rejected the budget in toto.
Former Chairman Site Association of Industry (SAI) Saleem Parekh said that the budget carry nothing to redress energy crises and improve law and order which is prerequisite for industrial development. He said any concession or incentive couldn't boost industrialists or keep wheels of industries moving without electrify and gas.
He said that the business community was expecting that the government would announce some measures to boost exports as President Asif Ali Zardari announced the year as textile year of export. Whereas tax has been imposed on import of machinery which will be refunded in 12 months equal instalments. Former Chairman North Karachi Association of Trade and Industry (NKATI), Captain Mouiz Khan said that the budget has been prepared on the directive of IMF and it carries nothing for industries, traders and general pubic.
He asked how this budget could provide relief to the nation where GDP growth has been indicated at 2.6 percent whereas the population growth is 2.4 percent. He was of the view that that there are 62 percent indirect taxes and 38 percent direct taxes.
He said that the country has bumper crop of cotton, wheat and sugarcane but its benefits have not been pass on to the general public. President Site Superhighway Association of Industry (SSHAI). Raja Mohammad Ilyas said that the budgets carry nothing to bring down prices of goods and boost industrial and trading activities.
Criticising reduction of import tariffs, he said it only help boost foreign products in Pakistan and does nothing to boost Pakistan exports. The Chairman, Pakistan Tanners Association, SZ, Aziz Ahmed said that leather sector which is the second largest earner of foreign exchange has not been given any relief despite the fact that leather industry is facing extreme hardship due to frequent power outages, gas shortages, export and smuggling of livestock.
"Trade and industry were disappointed over lack of an incentives package in the budget for attracting investment and promoting industrial and exports", Aziz said. He said that the government should have removed 17 per cent Sales Tax on import of plant and machinery imposed on March 16, due to, which the export-oriented industry would suffer badly and investment may come to a halt, he warned.
"For attracting investment and promoting industrial activity it was necessary that such taxes on import of plant and machinery should have been immediately removed," Aziz added. There was an urgent need, he said to take measures for sustaining growth in exports and that could have been only done by promoting investment and industrial activity.
There are no extraordinary steps in the budget to give impetus to industrial activity at a time when the country is confronted with numerous issues, such as gas and power shortages and bad law and order situation. However, it could only be appreciated that the new budget has not imposed new taxes. On the contrary, tax rates have been reduced and some duties have been eliminated, he added.
While giving his comments on the Budget for 2011-12 President, Lasbela Chamber of Commerce and Industry (LCCI) Dr Muhammad Aslam, said that while formulating the budget estimates the government has failed to address the miseries of common-man. The government failed to give any agenda or plan for the economic revival of the country. At the same time the revenue targets are quite ambitious and difficult to be achieved. No concrete steps have been taken to boost the industrial investment and to reduce the energy crises of the country that is directly resulting in the quite slow growth of the economy continuously since the last three years.
Dr Aslam said that although the allocation of PSDP has been raised to 12% as compared to that during the current year, but it is not likely to be achieved in view of the huge deficit of Rs 850 billion in the budget which is very difficult to be reduced through internal and external borrowings. In that case again the cuts in the PSDP allocation are likely to be announced in the later stages.
He further said that the imposition of Sales Tax on machinery and equipment at the local purchase and import stage would further jeopardise the efforts of the business community to boost the industrial investment and revival of the sick industries. The government should have proposed concrete measures to encourage the growth of the industrial investment which is a sustainable source of revenue generation, generating about 48% of employment opportunities at the same time.
However, he appreciated the reduction of sales tax from 17% to 16% but in his opinion this reduction would be off set by likely increase in the tariff of utilities because of 50% reduction in the subsidies on this sector. He stressed upon the need of revision of rate of sales tax at more than 17% on some items to bring the same down to 16% to ensure the applicability of this tax at uniform rate at all commodities. He also appreciated the increase of 24.3% in the share of Provinces proposed to be transferred to Provinces, which would of course provide some relief to the Provinces likely Balochistan.
While appreciating the 15% increase in the employees' salaries, he added that the government should have taken the steps to reduce the inflation rather than to increase the salaries which will ultimately increase the pressure on the budget.
The Chamber's Chief further gave his opinion that the government has largely relied on in-direct taxation rather than taking the affluent class including agricultural landlords into direct tax net, which is not justified, as the current tax payers have been largely burdened.
He suggested that the government should focus on broadening the tax-net by taking all types of incomes beyond the exempted limit and in this way the deficit in the budget may be reduced An emergent meeting of Sukkur Chamber of Commerce and Industry was held today under Chairmanship of its President, Khalid Mehmood Khan.
The Chamber declared the Budget as disappointment to the trade and industry of Pakistan, since these both segments of our fragile economy, has been neglected. The budget will benefit only the government and its functionaries, whose pay and perks have been raised. Nothing has been provided for the relief and welfare of common man, since the withdrawn subsidies will result into price hike of the commodities, which will over burden all the segments of society.
This will entail the rise of agricultural and industrial products. The allocation for education and health is quite meager and unrealistic. The reduction of General Sales Tax (GST) from 17 to 16% shall have counter reaction and will not benefit the taxpayers since the subsidies have been withdrawn or reduced the other way.
The Government ought to expand the tax base, instead of over taxing the responsible tax payers. There is huge disconnection between the real problems that afflict Pakistan's economy and its people. The core problem facing Pakistan, which has a bearing on development, on debt and on other expenditures, is that of taxation and revenues. Without raising taxes none of Pakistan economic problems can be resolved.
The Chamber finally appealed to the government to keep in mind the spirit of service to common man, boost to economy, reduction of poverty, maximum minimisation of inflation rate, expansion of education and health besides the steps to make the country vibrant to an extent.