KARACHI: The government is mulling to extend the tax refunds’ limit to Rs50 million per taxpayer from the present Rs5 million in the next year’s budget depending on the fiscal space, finance adviser said on Monday.
Adviser to the Prime Minister on Finance Hafeez Shaikh said the government is keen to stand by the business community in these difficult times and maximum relief will be provided in the budget of FY2020/21.
“The government is giving proper consideration to businessmen proposals in the upcoming budget and will continue to cooperate with the business community to boost the businesses and generate employment and economic development in the country,” Shaikh said during a video-link meeting with the Karachi Chamber of Commerce and Industry’s (KCCI) members.
The adviser said he would be available to discuss any issues and remaining anomalies after the budget to be announced on 12 June.
The businessmen requested the adviser to look into the possibility of reducing the taxes and speeding up of income tax refunds for the businessmen. They asked the adviser to take concrete measures to facilitate the business community for facilitating their business activities. Officials of the finance ministry and the Federal Board of Revenue (FBR) Chairperson Nausheen Jawed were also present at the meeting.
Jawed said KCCI’s proposals have been accepted for inclusion in the budgetary measures for FY2020/21.
KCCI President Shahab Ahmed said the budget is being prepared at a time when the country is facing an unprecedented crisis due to Covid-19 pandemic and every business and industry has been badly affected.
“In these extraordinary circumstances, people of Pakistan in general and the business community in particular are looking forward to a budget which provides substantial relief measures to rescue the economy from the brink of disaster,” Ahmed said.
Businessman Siraj Teli said trade and industry should be on the top priority in the budget rather than the revenues.
“Revenues can be recovered later only if the trade and industry survives hence the budget should focus on relief through these macroeconomic measures,” Teli said. “Domestic economy, which contributes 92 percent to the GDP and provides bulk of employment and revenues, has not received the much-needed relief and financial assistance.”
Teli proposed an across-the-board reduction of 50 percent in the rates of all taxes, including income and sales tax, federal excise duty and customs duties on capital goods and raw materials should be announced in the budget for one year. “Rates of electricity and gas should also be reduced to half for at least one year to help revive the domestic economy,” he said.
On the incentive scheme announced by the government for construction industry, Teli said similar incentives should be announced across the board for all sectors.
“Undocumented economy in Pakistan is twice the size of documented economy and a very large amount of capital is blocked in unproductive investments,” he said. “It would immensely benefit the economy to release the blocked capital and encourage investments into all sectors of industry and business.”
Teli said the unregistered individuals must be encouraged and allowed to get registered and become part of the documented economy. As an incentive, a policy should be adopted that no questions would be asked for all such investments. “In the present global crisis due to Covid-19 pandemic, no objections are likely to be raised by IMF, World Bank, G20 and FATF,” he said. “It is therefore a good opportunity for Pakistan to unlock a huge untapped pool of capital.”
The businessman said reduction in interest rates in piecemeal and installments does not provide the desired impetus to growth. “To provide thrust the policy rate should be reduced to 4 percent in one go to stimulate growth and reduce cost of doing business,” he said. “All major economies are taking extraordinary measures to reverse the decline due to Covid-19 pandemic through quantitative easing and interest rates are down to zero.”