KARACHI: Pakistan Bus­i­ness Council (PBC) chief executive officer Ehsan Malik said on Wednesday the country’s fiscal policy is inconsistent, inequitable and replete with U-turns.

Addressing a summit of business leaders jointly held by Nutshell and Martin Dow groups, the head of the advocacy body representing the interests of 87 blue-chip companies said the latest imposition of sales tax on new-economy products like solar panels and laptops is tantamount to killing the goose that lays the golden eggs.

“The inter-ministerial fragmentation needs to be resolved. We have at times ministers who’re talking in different directions. That’s very confusing for businesses,” he said.

Mr Malik criticised the structure of the International Monetary Fund (IMF) loan programme, saying it taxed the already taxed. “There’re significant issues with the IMF programme. You can’t have front-loaded burden on the formal sector, which [already] pays taxes. By raising the energy cost, you create an incentive for people to evade taxes,” he said.

In addition, said the PBC CEO, the brief period for which the current IMF programme is going to be in place gives little hope for any reforms of fundamental nature. “We won’t get reforms on the fiscal side, we won’t get them on the energy side either. We won’t be able to reduce the burden of state-owned enterprises,” he said, noting that another IMF programme after the conclusion of the current one is “inevitable”.

“Perhaps the new government will have to do it. But the hope here is that’ll be better designed and better structured,” he added.

Mr Malik stated that the government’s policy is biased against “scale” as holding companies attract double taxation on inter-corporate dividends. “It denies venture capitalist and private equity funds the pass-through status that they had previously... The incentive to invest in plant and machinery has been withdrawn [but] real estate is exempt from capital gains,” he said.

Speaking on the occasion, Sindh Governor Imran Ismail said industrialists made more money in the last three years than they made in the preceding 10 years. He condemned the anti-business sentiment and hailed businessmen as virtuous people. “Businessmen are hardworking people, not thieves,” he said, adding that kids should be taught about successful businessmen in curricula.

Published in Dawn, January 13th, 2022