LAHORE, June 7: The budget for the year 2003-04 has elicited a mixed reaction from businessmen, tax experts and others.

According to the All Pakistan Textile Mills Association (APTMA), the textile industry was dismayed over the government’s failure to address the issue of the price of polyester staple fibre, which was higher than that in the international market.

“We were anticipating that the government would take some step to make the fibre available to spinners at international prices in this budget so that its use as raw material could increase,” Punjab APTMA chairman Arif Saeed said in his comments on the budgetary proposals.

He described the budget for the next fiscal year as favourable for the country’s industry. But, he added, the textile industry was still hopeful that the “government would not put the issue in cold storage and would soon announce some kind of relief for the textile industry”.

The spinners say they are being “forced to pay a price for the polyester fibre that was higher than the international price due to the protection enjoyed by producers of synthetic fibres”. The government is considering several proposals in order to remove this anomaly, but has not come up with any decision so far.

Former Aptma chairman Abid Farooq was also disappointed to see that the budget had neither addressed the issue of input costs for the industry nor resolved the issue of PSF prices.

“It’s good that the budget has no new taxes and the government has cut the rate of excise duty on cement by 25 per cent to boost the construction sector. But no effort seems to have been made to bring down the cost of inputs (electricity, etc) for the industry in general. The budget will not help the industry attain the (cost) competitiveness which is essential for increasing exports,” he said.

As far as the textile sector is concerned, he was disappointed that no measures had been adopted to address the problem facing the industry because of the high cost of man-made fibre, particularly the polyester staple fibre, due to the sovereign guarantee enjoyed by the ICI.

“Aptma has actively been pursuing this issue since long and hopes that a level playing field would be provided in this regard. But nothing has been announced for the largest industry of the country,” he said.

Pakistan Ready-made Garments Manufacturers and Exporters Association (PRGMEA) chairman Pervaiz Hanif said exporters were happy on the finance minister’s promise to look into and address the problems in the DTRE scheme and reduce the number of audits of businesses for sales tax to just once a year. But, he said, it was premature to comment on the budget speech “without going into the details of the budget”.

Lahore Tax Bar Association president Shafqat Chohan said that the government had introduced some 120 amendments and changes in the Income Tax Ordinance 2001 to remove its flaws. Most of the changes, he said, had been borrowed from the Income Tax Ordinance of 1979 which proved that the new law did not fulfil the government needs for revenue collection.

He said the universal self-assessment scheme (USAS) to be launched from July 1 for the assessment year 2002-03 gave immense discretionary powers to the assessing income tax officer who could accept or reject returns filed by the taxpayers in his discretion. He said the powers given to the assessing officer defeated the very concept and idea of introducing the USAS. However, he noted, the government had assigned the income tax commissioner powers to revise the decisions of assessing officers, which was a good step. At least, the taxpayers would be able to gain some relief at some stage.

Mr Chohan said that though the finance minister could take some pride in presenting a tax-free budget, he should also have told the people that there was no item left for the government to tax.

He, however, welcomed the steps taken by the government in the budget for improving the sales tax system, like reduction in the rate of additional sales tax from two to one per cent. Yet, the LTBA president lamented that the government had not announced any tax incentives for local and foreign investors, which could have sped up the process of industrialization in the country.

TRADE UNIONS: Trade unions have called the announcement of 15 per cent increase in salaries and pensions in the federal budget an eyewash keeping in view high cost of living.