Saturday , July 11 2020
Breaking News
Home / Breaking News / Business community disappointed industries ‘ignored’ in budget 2020-21
Business community disappointed industries ‘ignored’ in budget 2020-21

Business community disappointed industries ‘ignored’ in budget 2020-21

KARACHI/LAHORE: Some sections of the business community are disappointed over the federal budget 2020-21, saying steps should have been taken to help the coronavirus-hit industry, especially by restoring a ‘no tax no refund regime’.

“Extraordinary steps were needed to overcome extraordinary challenges in the post-COVID arena,” Irfan Iqbal, president Lahore Chamber of Commerce and Industry (LCCI), said while addressing a post-budget press conference.

“The government did well by presenting a tax-free budget, but no special package has been announced in the budget to boost exports and to remove the hurdles that are hampering the growth of the exports sector,” said Iqbal. “No policy has been announced to reduce energy cost, which is one of the biggest reasons for high industrial input cost.”

Manzur Malik, former president of Sheikhupura Chamber of Commerce and Industry said the budget was “loaded with hollow commitments”.

“No steps were announced to ease the cost of doing business. Issues related to advance taxation and unnecessary length of documentation were ignored,” Malik said.

“Due to COVID-19, many industries are closed and finding it hard to restart. The banks are reluctant to rescue them.”

Industrialist Ikhtiyar Baig termed the budget “directionless”, “wherein no incentive was announced to spur industrial growth, which is estimated to be around 0.7% next year”.

“The industry is shocked the proposal of restoring ‘no tax no refund’ mechanism was not announced. It may be because of IMF’s pressure. It is a big disappointment for the export-oriented industry, as exporters’ cash lines have dried up and we cannot pay 17% sales tax and then wait months for the refund.”

However, Shahzad Azam Khan, ex-chairman of the Pakistan Hosiery Manufacturers Association, commended the government for its stance on sales tax regime for exporters.

“Refunds are being promptly made,” he said.

Iqbal of LCCI appreciated the allocation of funds for power and water projects and agriculture sector, exemption of additional customs duties, reduction of customs duty and reduction in regulatory duty on smuggling-prone items.

Yasir Mehmood, former chairman of the Lahore Stock Exchange, said everything would now depend on how the situation unfolds on the COVID-19 front.

“Overall, there is no radical deviation from last year,” said Mehmood. “Government appears aware of constraints.”

Mustafa Kamal Pasha, former chairman of the Pakistan Poultry Association, said the budget has not announced any measures to increase the industry’s income.

“The Poultry industry has always been neglected by policymakers although it has the potential to become the largest foreign exchange earner,” he said.

Ashraf Bhatti, central president of the Pakistan Anjuman Tajran, said the government did not accept the budget proposals of traders and has even continued with the condition of CNIC and withholding tax.

Bhatti said the Federal Board of Revenue’s target is very ambitious given the economic situation of the country amid a global pandemic.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) termed the federal budget 2020-21 a corona-oriented balancing budget, as no new taxes have been imposed and costs of imports are reduced.

Zakarya Usman, senior vice president of FPCCI said most of their proposals had been incorporated in the budget adding, “We have not received the details regarding exceptions and reduction in import duties, and we will express our comments once we get all the details.”

Usman appreciated the proposal of increasing the exemption limit for submitting CNIC to Rs100,000 worth of purchases against the existing value of Rs50,000. “We had been proposing to increase the exemption limit since long, and now the government has done it.”

Usman said this was not a revenue budget, and the proposals would facilitate the business particularly small and medium-sized entrepreneurs. “Reduced duties and taxes on raw material import would facilitate import substitution and bode well for the economy.”

Businessmen Group Chairman said Siraj Kassam Teli said this could not be considered a relief budget. Teli said it is not a relief budget. “No new taxes have indeed been imposed, but some of the existing taxes have been increased and some are decreased.”

Teli said the budget did not announce any relief for the entire business community including SMEs, and small traders. “It should have been a relief budget. The government should have reduced taxes and provide relief on utilities and other levies.” He appreciated incentives for construction and tourism industry but criticised that other sectors were left unattended.

“We will be able in a better position to comment once all the details regarding the increase/decrease in taxes and duties.” Karachi Chamber of Commerce and Industry President Shahab Ahmed said the government set ambitious targets of GDP growth, revenue collection, industrial growth and agriculture growth, which would not be achieved.

“The entire world is going through a recession and Pakistan is no exception. The government should have given a thought to this reality.”

AQ Khalil, general secretary of Businessmen Group said the government was proposed to cut the tax rates by 50% for one year to ensure economic recovery after losses due to coronavirus.

Ibrahim Kasumbi, former senior vice president of KCCI said the chamber proposed reduction in sales tax to eight per cent from existing 17%. However, the sales tax rate was reduced to 12% from 14% only for taxpayers required to install point of sale. Targets set for the next fiscal year may not be achieved due to the adverse impact on the economy. The government has not taken measures in the budget which may provide a jump-start to the economy. “The government is not seen in a position to take risks,” he added.