KARACHI: Stocks investors who may have remained glued to the television screens waiting for the minister to flip through the budget document and reach the incentives for the capital market felt their jaws drop as there was nothing in the budget directly related to providing an impetus to the market.
While the Federal Minister Hamad Azhar termed it a ‘relief budget’, investors graded the budget between “a status-quo” and “disappointing”.
Mr. Arif Habib, former PSX chairman, was charitable in his remarks conceding that the government did not have enough space to deliver more in the face of economic challenges and huge budget deficit.
He termed the budget as “real-estate promotion budget” as the document ignored all other sectors. “Although the budget is tax free, more reliance was required to increase the economic activity and to generate incomes to meet the collection target,” he said while adding that the budget fell far short of capital market expectations.
Zulqarnain Khan, executive director Next Capital expressed surprise over the fact that the principal demand of elimination of capital gains tax for next 12-24 months that was made by the PSX and endorsed by the Securities and Exchange Commission of Pakistan (SECP) was set aside. He said the talks of focus on market growth was nowhere to be seen which made the budget neither industry nor market friendly.
“Government used to generate a tidy amount of tax from the capital market in yesteryear, but the rigid and stringent policies by the budget makers did not give that a thought”, he said.
Other brokers, market players and traders also had similar things to say. Khurram Schehzad, CEO at Alpha Beta Core affirmed that at best the budget can be termed “neutral”.
He said that no steps were taken to reduce the super tax, turnover tax and corporate tax. Tax relief for new listings was also ignored. “There is every likelihood of a revised (mini) budget and one can hope some incentives would then be provided”, he said.
Samiullah Tariq, head of research and development Pakistan Kuwait Investment Company said that popular measures had been taken in the last two years but given the uncertainty over resource mobilisation in the face of Covid-19, the budget allocations were “realistic”. Yet, he conceded that the stock market was given next to nothing.
Additional duties and taxes were removed on 16,000 items; federal excise duty on cement was slightly lowered to Rs1.75 from Rs2 per kg and duty on Cold rolled steel was lowered a bit.
Published in Dawn, June 13th, 2020