KARACHI: Pakistan’s business community wants the government to reduce taxes and offer other economic incentives to deal with financial challenges amid the coronavirus pandemic as the country prepares to unveil its next budget for fiscal year 2021-22 in the first week of June.
“The country’s new finance minister Shaukat Tarin emphasized the necessity of industrial growth and lowering interest rates before assuming the responsibility of running Pakistan’s economy,” Chairman Pakistan-Afghanistan Joint Chamber of Commerce and Industry Zubair Motiwala told Arab News on Saturday. “If he only implements what he said, it will probably be enough for most of us.”
He said that the country should slash its income tax rate.
“The government needs to increase revenue generation,” Motiwala acknowledged. “However, it should do it by broadening the tax net instead of putting extra burden on existing taxpayers.”
President of Karachi Chamber of Commerce and Industry Shariq Vohra agreed, saying the finance ministry should reduce the rate of general sales tax (GST) in the country.
“The government must stop harassing businesspeople who already pay taxes and offer them incentives,” he maintained. “The GST should be lowered to 8 percent, withholding tax should be abolished and financial resources should be made available to small and medium enterprises.”
Pakistan’s female entrepreneurs also demanded a business-friendly budget.
“My expectation from the next budget is that it will offer sufficient incentives to women-led businesses and facilitate them to become part of the country’s mainstream economy,” President of Women Chamber of Commerce Shahnaz Ramzi told Arab News.
“I suggest that women-run businesses should be given loans on lower interest rates and the government should also reduce income tax slabs for them for the first five years,” she added.
As the country faces a surge in coronavirus cases, experts believe it will not be easy for the finance ministry to prepare a budget that satisfies everyone.
“It is going to be quite challenging amid the third wave of COVID-19,” Dr. Ikram ul Haq, a senior economist, commented. “The main problem is to achieve growth while taking tough measures suggested by the International Monetary Fund to meet the tax target of Rs5.5 trillion.”
However, Pakistan’s textile goods exporters said it was not just the government that was finding it difficult to deal with the pandemic, adding that their whole industry was reeling under its impact.
“The export industry is currently operating at 50 percent of its capacity due to lockdowns and other virus restrictions,” Ijaz Khokhar, chief coordinator of the Pakistan Readymade Garments Manufacturers and Exporters Association, said.
“Majority of companies are holding back shipments worth about $200,000 as their buyers in Europe are reluctant to step forward and complete transactions due to the pandemic situation in their countries,” he said. “Under the circumstances, the industry may collapse if it is burdened with more taxes.”
Khokhar called for a soft loan policy in the budget like those introduced by other countries.
“European states have given soft loans to their industries that are payable in five years,” he added. “We are also looking for similar support from our government.”
Meanwhile, Pakistani agriculturalists demanded duty-free import of farm machinery and other equipment to increase output and productivity.
“All kinds of agricultural equipment, including the one utilized in cold storage facilities, should be allowed in the country without any duty,” Waheed Ahmed of All Pakistan Fruits and Vegetable Exporters, Importers and Merchants Association maintained.
“Other than that, the government must lift the regulatory duty on chemicals and packaging to increase exports in this sector.”
Pakistan expects an economic growth of 3.94 percent in the current fiscal year, though last year this figure stood at negative 0.47 percent.
The country’s new finance minister has said that he wants to increase the growth rate to about seven percent to create more employment opportunities while hinting at spending Rs900 billion ($6 billion) to spur the economy.
“Huge allocations are required to mitigate the financial hardships of the business community before more jobs can be produced,” Haq told Arab News. “Pakistan needs about seven to nine percent growth to create employment opportunities for two million young people.”
“Incentives should be offered to those who manage to create jobs,” he added. “Besides, structural reforms in the tax system are imperative for a higher growth in the country.”
