KARACHI: United Business Group (UBG) leaders Patron-in-Chief SM Tanveer, President Zubair Tufail, General Secretary (Sindh) Hanif Gohar and UBG Core Committee Member Syed Mazhar Ali Nasir discussed the challenges faced by investors and the government’s policy for economic stability.
Actions are emphasized. UBG leaders while talking to a representative delegation of businessmen and industrialists highlighted the challenges hindering foreign and domestic investment in Pakistan’s economy.
The lack of long-term policies, uncertainties, and a burdensome tax regime have created a challenging environment for investors.
High utility tariffs, excessive taxes, including super tax and taxes on dividends, have significantly increased the tax burden on industries, with effective tax rates reaching as high as 68 percent for shareholders.
Moreover, the absence of a clear industrial policy and disproportionately high energy tariffs, coupled with prolonged load shedding of power and gas, have further exacerbated the economic woes, causing frustration within the business community. Issues such as smuggling, under-invoicing, and misdeclaration of imports have added to the challenges, creating a perfect storm that undermines industry growth.
Prospective investors, observing the reluctance of existing investors to further invest, are hesitant to commit to Pakistan’s economy. To address these pressing issues, UBG leaders emphasized the need for technical support to tackle energy sector challenges, including the massive circular debt and losses in gas and electricity transmission.
UBG urged the government to reduce reliance on imports, implement sustainable tax policies, and simplify fiscal regulations to encourage wealth creation, job growth, and exports.
They advocated for the separation of fiscal policy from tax collection to prevent short-term revenue-seeking actions by tax authorities. In addition, they stressed the importance of aligning fiscal policies with industrial, investment, and trade policies to foster a conducive environment for growth.
Furthermore, UBG called for the phasing out of the super tax, which has raised the corporate tax rate substantially, and recommended a reduction in general sales tax to incentivize retailers to join the tax net.
They emphasized the importance of increasing the tax-to-GDP ratio to at least 15 percent by broadening the tax base and urged the government to focus on critical issues in the federal budget 2024-25 without overburdening existing taxpayers.
Copyright Business Recorder, 2024