Syed Mazhar Ali Nasir
Senior Vice President, FPCCI
Majorly disappointed with the budget as no measures have been taken for industrial growth. There are no incentives to stimulate and boost growth.
The least the economic wizards in Islamabad could have done is to include some import substitution measures to ensure industrial growth.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) demanded for scaling down sales tax rate for unregistered persons from 2 per cent to 1pc, instead sales tax has been increased to 3pc and this will push the cost of business up.
FPCCI demands scaling down sales tax rate for unregistered persons from 2 per cent to 1pc
The government needs to bring down cost of doing business which is highest in the region, but no measures have been proposed.
This is more of a populist budget focused on social sectors like health, education and infrastructure.
I am also apprehensive about the entire budgetary exercise because the next government may not own the measures or come up with mini budget.
Though there are some positive steps, the FPCCI would give its official version in a press conference on Saturday (today).
M Abdul Aleem
Secretary General OICCI
Overall the budgetary measures seem to have been delicately crafted under a prevailing uncertain environment. From the Overseas Investors Chambers of Commerce and Industry (OICCI) perspective, we are disappointed with the staggering 3-4 per cent super tax which should have been withdrawn in totality. Similarly reduction in corporate tax rate in installment by 1pc for next five years is a positive but below expectation and regional average.
The finance minister has also disappointed many by not giving a way forward in settling the long pending tax refunds of the corporate sector.
Disappointed that long pending tax refunds of the corporate sector have still not been settled
However, the withdrawal of tax on bonus shares, lowering of tax rate and limit on undistributed profit are appreciated. Lowering of tax rate and limited on undistributed profit are appreciated as is the extension of tax incentive on BMR investment up to 2021 and 20-year tax holiday on deep conversion oil refinery.
Data mining promised by the finance minister of finance to broaden tax base has been long overdue and will be watched by all the stakeholders intensely.
Mostly the budget 2018-19 is positive though some expectations of the business community were not met. The Pakistan Business Council (PBC) finds it highly encouraging that the corporate tax is being reduced by 1 per cent annually from 30pc to 25pc by 2023. The move to remove tax on bonus share is also welcomed and positive. Similarly, reduction in super tax on banking and non-banking companies will help capital formation.
The budget proposal of extending tax credit on investment on plant and machinery up to 2022 is positive. However, income from dividend should also have been exempted from tax. Under the Finance Act 2017, group profit surrender with profit should have been restored.
Reduction in super tax on banking and non-banking companies will help capital formation
Factual observation could only be made after going into details of the budgetary measures but we do have apprehensions about the measures.
Withholding tax rate on non-filers should be at least 3 times higher than that charged on filers. We had demanded that custom duty of 3pc on imports of plants and machinery should be abolished.
Custom duty of 5pc and 6pc on coal and pet coke should be reduced to zero per cent.
Fawad Ejaz Khan
The Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) is highly critical about the proposed budgetary measures. The exports sector has been totally neglected in the budget proposals.
The government for the last five to six months has already stopped paying refunds amounting to billions of rupee belonging to export sector. What the finance minister deliberated in his budget speech indicates that payment would not start before July 30, 2018 and payments would continue throughout next fiscal year (2018-19).
Delay in the payment of refunds will create liquidity crunch for exporters
As per the State Bank sources, no account has been opened for making payments under new Duty on Local Taxes and Levies (DLTL) scheme and this means that refunds will paid in 2019. The entire export sector has not received refunds on account of sales tax refund and income tax and this is creating a liquidity crunch in the industry and will hurt exports. This is a death warrant for the export oriented industry which was waiting for some positive measures in the budget and instead got such a response which has totally disappointed the industry.
The budget has been disappointment for Pakistan Bedware Exporters Association (PBEA). There are no incentives for the exports sector.
Textile, which is the largest and most important sector of the economy, has been totally ignored. Instead, a punitive measure of sorts has been taken by extending payment of refunds.
At a time, the when current account deficit is ballooning and exports have been facing difficulty owing to high cost of doing business, the government has extended the refund payments for another year.
Very disappointing that the government has extended the refund payments for another year
The export sector is already faced with liquidity crunch, holding back refunds for a further period of one year will cripple our exports commitments and ultimately exports will decline.
The export oriented industry provides jobs and also earns valuable foreign exchange for the country but the economic planners have totally ignored the industry which could be disastrous for both job seekers as well as exports.
Overall the budgetary measures are good, progressive and growth oriented. These measures will help capital formation because tax on bonus shares is being abolished and tax on dividend has been reduced from 12.5 per cent to 5pc.
The measures for ensuring documentation of the economy are also encouraging. Documenting property and fixing rates on market basis rather than DC rates will help divert huge funds and investments towards industry and other productive economic activities of the country.
The siphoning of funds from industry into non-productive sectors would also end because once investment in the industry becomes viable as people would prefer to venture out into production activity.
Measures for ensuring documentation of the economy are encouraging
The decision to limit comprehensive tax audit to one in three years and empowering ADRC and its decision, if properly implemented, is a step in the right direction.
However, we have failed to find the necessary ‘out of the box’, new initiatives which are urgently needed to rejuvenate large foreign direct investment (FDI) which is waiting on the sidelines to enter in the country to meet growing economic need of the country.
Published in Dawn, April 28th, 2018