KARACHI: The Small and Medium Enterprises Alliance (SAMEA) has urged the government to reduce sales tax rates and also relax collateral condition on bank loans.

In its budget proposals for 2017-18, the organisation pointed out that sales tax rates in Pakistan were high despite low per-capita income.

SAMEA President Zafar Iqbal said that in developed countries like the United States where per-capita income was much higher the general sales tax (GST) rate was between four to eight per cent compared to 17pc in Pakistan.

He said small and medium enterprises (SMEs) formed the backbone of the economy and therefore they should be given maximum facilities. He believed that conditions laid down for getting Rs3 million loans were harsh and could not be met by SMEs.

He said the condition of collateral against bank loans given to SMEs should be removed and documentation should be minimised because these enterprises are mostly run by individuals or by small groups or a family.

Mr Iqbal also asked the government to end withholding tax on cash withdrawal by registered taxpayers and double the threshold for non-registered persons of cash withdrawal to Rs100,000 a day.

Moreover, there was need to remove discretionary powers of tax officers as it led to corruption and hurt economy.

Without ensuring smooth and uninterrupted supply of utilities like gas, power and water at competitive rates with regional countries, the government could not create jobs and have higher gross domestic product growth.

The SAMEA president said the government should be careful that the inflow of foreign exchange into the country was not disturbed by increasing restrictions being imposed by Western countries for money laundering.

But without ensuring good governance the country’s institutions and the economy could not perform and produce desired results and the time has come that all loss-making state-run institutions should be privatised and those making profits should be retained, he added.

Published in Dawn, April 8th, 2017