Gets mixed reactions from businessmen & analysts
June 08, 2012
The business community, industrialists and economists expressing mixed reactions over the federal budget 2012-2013, said that against expectations the government has failed to give any roadmap to resolve energy crisis, announce agriculture tax, while relaxation for industrial sector in taxation is appreciable.
The completion of ongoing hydropower projects, construction of new dams and allocation for coal power projects have not been made, besides ignoring the interest rate issue altogether, the experts remarked.
The budget appears to be ‘murky and hazy’ with clear indication that mini-budget is not far away, which would only overburden poor and helpless masses of the country.
Karachi Chamber of Commerce and Industry (KCCI) Acting President Younus Bashir in his reaction to the salient features of the annual budget slammed inappropriate attitude displayed by the opposition during unveiling of the budget terming it as improper for a civilised society.
He said the budget was prepared in a way to appease a segment of the society keeping in mind the next general elections, thus making it virtually impossible for its implementation.
“The government is likely to make some amendments in this budget in the next few months, which would cast a negative aspersion over its image,” he added.
All Pakistan Motor dealers Association Chairman HM Shahzad said that failure of the federal finance minister to announce removal of regulatory duty on used vehicles is a gross injustice as the association made several attempts to draw his attention towards this burning issue but all in vain.
Talking to scribe former Fruit and Vegetable Exporters Association of the Pakistan chairman Abdul Wahid said the budget appears to be a complete figure fudging as it has failed to ensure any relief to masses and industrialists. Enhancing sales tax on sugar and making frequent upward revision in electricity tariff is nothing but multiplying miseries of general public already groaning under rampant inflation.
The federal finance minister has only attempted to highlight the rosy picture of the budget offering a number of duty withdrawals and abolishing of federal excise duties on a number of items, but completely failed to elucidate sources of revenue generation.
No major steps were unveiled in the budget paper to ameliorate the plight of downtrodden masses and instead eyewash measures were unveiled, which amount to dashing aspirations of masses. Wahid claimed that there are strong prospects that majority of budget proposals would remain unimplemented.
SirajKassamTeeli, a former president of KCCI slammed the government for its failure to explore new avenues of earning to boost the national economy claiming unless new taxpayers are not identified the older ones would continue to be victims of enhanced taxation.
Karachi Wholesaler and Grocer Group Chairman AneesMajeed said upward revision in the sales tax on sugar by 8.0 percent as announced by the federal finance minister in his budget speech, which would push prices of sugar by Rs 4 to Rs 5 per kilogramme amounts to gross injustice with the helpless consumers.
He however appreciated increasing withholding tax limit on withdrawal of money from banks from present Rs 25,000 to Rs 50,000 saying it would definitely help alleviate miseries of traders to some extent.
All Pakistan Textile Mills Association Chairman Ahsan Bashir said that unfortunately nothing positive has been done for the textile industry as the government has ignored energy crisis and interest rate issue in the budget. “Nothing is most costly than unavailability of energy in the country.” He said Rs 183 billion allocated for the energy sector would be used within one month and no concrete steps have been taken in this regard.
He however said that decrease in tax slab from existing 17 to 5 is also a good step for the economy. He said that cut in federal excise duty on cement would also support the construction sector, which was in dire need of government’s help.
He said that the prime minister’s decision to convert the Prime Minister House into an institute for advanced studies would promote austerity culture and discourage lavish living in big houses.
The financial sector will face slightly positive and marginal negative impacts from imposition of new duties and its waivers proposed in the budget, analysts said.
The banks actively investing in money market and income funds have been proposed tax increase from 10 to 25 percent, which will not hit the profits of many banks but hurt income of a few.
The removal of federal excise duty (FED) on the Asset Management Companies will enhance investors as to pump in money without duties, on the other hand, it may enhance the revenue of the companies if investment will be increased.
The government proposal reflects that it intends to encourage investment whereas revenues will be generated from the potential sectors for increasing earnings of government kitty.
To promote investment in securities and insurance sectors, the limit of investment eligible for tax credit is being enhanced from 15 percent to 20 percent of the taxable income. Moreover, the existing limit of investment of Rs 500,000 in securities or insurance premium is also being increased to Rs 1,000,000 besides the retention period of securities is also being reduced from three to one year.
The taxes on shares particularly capital gains tax (CGT) has been kept same as it was notified in the presidential ordinance, hence the budget remained neutral for equity traders.
The CGT is being levied on the sale of property if it is disposed of within two years of its acquisition aimed at curbing speculation or holding real estate for trading purpose.
Analysts said CGT on immoveable property might hit banks’ consumers portfolio indirectly as a number of investors taking loans from banks will be discouraged from the new taxes.