The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) hailed the federal budget 2022-23, but warn of long-term impact on trade and industry, terming it a ‘partially balanced budget’, which has no focus on changing economic priorities.
The BMP Chairman and FPCCI former president Mian Anjum Nisar said that the present budget lacks major objective of giving a long-term direction to economy, as no visible reduction in cost of doing business or cut in taxes in budget has been announced to speed up the growth or create new jobs in the country. He said that Pakistan needed millions of jobs annually but the government had not taken any concrete step in federal budget for job creations for the unemployed youth. Although details are still to come out, the budget vibes seem positive, he said.
The BMP Chairman commended the government for removing duty from solar panels import by agreeing to the demand of industry. He praised the government for introducing an alternate dispute resolution (ADR) mechanism which, he said, was a longstanding demand of the industry. He said corporate tax had been increased and feasibility of the sector was already out, as its raw material had doubled in prices. Fuel, diesel, and gas prices have increased. Besides, they need to increase prices of their staff and cater them. Direct tax collection seems impossible. Tax on 130 items has been dropped, while increased on 670 items whose details are not available yet.
The FPCCI former president said that the government failed to introduce a well-thought out strategy for enhancing production of key crops including cotton, wheat and oilseeds in addition to reducing cost of production of farmers in federal budget 2022-23.
He expressed dismay that on one hand the government was rightly distressed over rising inflation, but on the other hand it fell short of addressing the root cause of this alarming trend, which was continuous downward trend in farm productivity. He also called for reducing the input cost of farmers that was increasing particularly due to upsurge in power tariff and increase in rates of fuel.
Mian Anjum said that the government gave a big miss to industry and agriculture sector, the backbone of the national economy while announcing budget 2022-23. He said that input cost of farmers increased many times, but the government did not announce any tangible step for reducing it.
Amid unprecedented water shortage, the electricity tariff multiplied along with spiraling petrol and diesel prices, making industry as well as agriculture one of the costliest affairs.
Mian Anjum Nisar said the government had announced some incentives on import of plants and machinery, which was a good step to promote industrialization, but no incentive was announced for corporate farming. He also lauded the withdrawal of sales tax on seeds and urged the government to regulate this sector, arguing the inferior quality or seeds was damaging crops, causing huge financial losses to farmers.
He stated that the businessmen had demanded of the government to take concrete steps in the upcoming Federal Budget 2022-23 to keep industrial wheel running especially of SMEs, saving the livelihood of millions of workers associated with the small industries. The major focus should have been on greater relief to the documented and registered SMEs.”
In this budget too, the government attempted to squeeze the neck of old taxpayers instead of taking efforts to bring new taxpayers into tax net.
Budget FY23 is an attempt to satisfy IMF on key matters relating to revenue collection, subsidy reductions, and attainment of fiscal discipline, he stated.
He was of the view that last year’s expansionary budget had resulted in industry-led gross domestic product growth of 5.97 percent in FY22 and a huge increase in imports. The latest budget was more focused on economic stabilization.
Though FY23 revenue collection target was set at Rs7trn, it would be a challenge to achieve the target due to the economic slowdown and lower collection from oil sales, he stated.
He said the tax rate on banking companies had been increased from 39 percent to 42 percent and included an additional 3 percent super tax, which could fetch around Rs15 billion to Rs20 billion of taxes.
Narrating relief measures, he said that zero sales tax on the import of solar panels and distribution, and zero tax on agriculture machinery and inputs including tractors, wheat and rice seeds.
Mian Anjum said taxes on the auto sector and raw materials of the cement sector would have an impact on the capital market. He said no load-shedding for the industry was a welcome step, and he called for announcement of the price of electricity and gas. Real impacts of the budget would be known in days to come, he stated.