KARACHI: The Overseas Investors Chambers of Commerce and Industry (OICCI) has expressed good gesture over federal budget 2014-2015 as it is being called as balanced, business friendly and growth oriented budget.
The President of OICCI Asad Jaffar said, “The government plans to reduce the fiscal deficit to below five percent, increase the tax collection by 24 percent and increase the Public Sector Development Program (PSDP) by 25 percent in fiscal year 2014-2015 is commendable.”
It said, “Moreover, tangible incentives proposed in the budget especially to the textile sector and new foreign direct investments (FDI) in manufacturing and construction industries, as it is seen by OICCI as a credible effort by the government and to revive economic growth together with ongoing fiscal consolidation.”
However, the proposed economic goals are largely dependent upon robust effort for delivering targeted tax collection of Rs 2.8 trillion which is extremely challenging but could be achieved with determined efforts on enforcement, accountability and good governance,” he said.
The chamber said that the budget proposals appear business friendly and supports the three year fiscal policy parameters which are announced by the finance minister, which includes for enhancing the tax to GDP ratio by one percent annually to a target of 13 percent by 2016-17 together with investment to GDP ratio of 20 percent.
It is highlighted that the focus of government is on increasing the level of direct taxation to the right direction together with new measures to boost tax collection; broaden the tax base and increase taxes and cost of doing business for the tax evaders.
The measures have been announced in the budget for the large size of the undocumented economy are positive but cover only a small portion of the informal sector in the country.
OICCI hopes that the announced measures will be implemented without compromises or favors. The OICCI is keenly looking forward to working with the proposed tax reform commission to improve the taxation structure for making it fair, equitable besides being simple, efficient and effective so that the country is able to substantially reduce the quantum of the undocumented sector of the economy.
It said that the incentive for exporters is quite timely and should lead to substantial increase especially for value added textiles. Similarly, incentives to the farming and housing sectors including the proposed insurance and loan guarantee schemes are positive moves to deliver growth.
It is appreciated that the reduced corporate tax rate to 33 percent as per plan will build confidence amongst the large tax paying corporate sector, although this reduced rate should also have been applicable to banking sector.
The OICCI said that marginal reduction in taxes for telecom sector together with new, although still low, taxation on retail sector is a welcome move.
However, OICCI is concerned that withholding tax regime has been expanded rather than reduction in it and that final tax regime for sectors currently subjected to withholding tax regime which has not been implemented.
It said that growth supporting measures including reduction in interest rates on export refinance and long term financing facility which is expected to motivate the industrial sector to expand in export oriented sectors.
Asad said that reduced income tax rate of 20 percent has been announced for projects where 50 percent of capital is arranged through FDI in the form of equity.
OICCI commended on proposal, to introduce different advance tax and sales tax slabs for taxpayers and non-taxpayers, thus urging the latter to become a part of the tax net. Finance Minister has also proposed measures to recognize honest taxpayers and increase cost of doing business for non filers of income tax.
OICCI appreciates the measures for removing exemptions which are introduced through statutory regulatory Ordinances (SROs) during the last six years while retaining exemptions on certain essential items.