HYDERABAD: Muhammad Farooq Shaikhani, President Hyderabad Chamber of Small Traders & Small Industry (HCST&SI), shared his perspective on the Federal Budget 2024-2025, emphasizing its crucial role in both developed and developing nations.
However, he expressed concern that in Pakistan, the practice of introducing mini-budgets after the annual budget diminishes its significance for businessmen, industrialists, and the general public. He noted that this federal budget appears to be more politically driven.
Shaikhani highlighted that out of the total budget of Rs18.87 trillion, a substantial Rs9.775 trillion are allocated for interest payments on existing loans. Additionally, the tax revenue target is set at Rs12.97 trillion, with an anticipated budget deficit of Rs8 trillion.
He raised a critical question regarding the federal government’s ability to adhere to these figures, especially if it enters into a programme with the IMF. He cautioned that an agreement with the IMF might necessitate another mini-budget to further increase taxes.
He stated that the government is increasing the burden on taxpayers by imposing new taxes without introducing effective policies to expand the tax net to include new taxpayers.
Shaikhani welcomed the federal government’s decision to extend income and withholding tax exemptions for FATA and PATA for another year. He acknowledged this initiative as a testament to the government’s commitment to supporting the economic development of these regions, helping to alleviate their historical socio-economic challenges.
Additionally, he praised the budget’s provisions for the solar panel industry, including a 1.5% reduction in interest rates and measures to address deficits. The move towards privatizing enterprises is also seen as a positive step. However, Shaikhani cautioned that unless interest rates are reduced to single digits, it will be challenging to attract industrialists to establish new industries in the country.
He emphasized that Pakistan’s economy is facing unprecedented challenges, necessitating the formulation of short, medium, and long-term policies for its improvement. He suggested that funds should be allocated for the development of dams and water reserves, and a shift should be made towards alternative energy and hydropower. Promoting the import of machinery and technology is essential to utilize these resources in industries that can generate new jobs and alleviate the country’s economic difficulties.
He expressed disappointment that the construction industry, often referred to as the ‘mother industry’ of 72 sectors, received no support in this budget. No country can strengthen its economy by neglecting the construction sector.
The imposition of federal excise duty on property will significantly increase documentation costs based on market value, discouraging proper documentation and leading people to rely on open agreements. Similarly, the application of a 15% rate on capital gains tax and the removal of timelines will further hinder the documentation process. This will drive people away from the government system, posing a serious threat to the construction sector.
He highlighted the absence of allocations in the federal budget aimed at combating climate change and global warming, which contribute significantly to floods and droughts in Pakistan. He stressed the urgent necessity of constructing a barrage at Jhark in Sindh, which would not only reclaim uninhabited lands in Thatta and Badin for agriculture but also mitigate these environmental challenges. Additionally, he proposed addressing the palm oil shortage by promoting palm oil tree plantations along the coastal belts of Sindh, thereby reducing dependence on imports.
Copyright Business Recorder, 2024