AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi, June 13, 2013 (PPI-OT): Karachi Chamber of Commerce and Industry (KCCI) in a press statement has stated that the new Government’s budgetary measures for 2013-14 incorporate the major policy decisions to put the economy back on track. KCCI believe 70 to 80 percent measures are business-friendly.
The bold and decisive measures announced are expected to yield positive results in the near future. Indeed the new government’s resolve to curtail fiscal deficit, reduce domestic debt and rely more on country’s own resources are commendable. However unfortunately it seems the FBR has inserted some harsh taxation measures which are likely to cause hardship to the trade and industry and have a negative impact on investment climate.
The KCCI believe mostly the budgetary measures are business friendly. The decision to stop the discretionary fund for parliamentarians and reduction in expenditure of the Prime Minister House and ministries is a commendable yet symbolic gesture by the newly elected government.
Increase in rate of GST by 1% (from 16% to 17%) will only yield Rs.50 Billion which is hardly 1.25% of the total revenue outlay while the burden will be passed on to the common man. Therefore it is suggested to recover the meagre amount through other accounts and save the common man from further hardship.
Some ambitious targets have been set by the Finance Ministry which look difficult to achieve. Total tax revenue target set at Rs.2598.0 Billion is unlikely to be achieved in view of last year’s dismal performance and the lack of clear strategy of expanding the tax net and increasing the number of registered persons.
The GST on zero-rating on all domestic supplies other than exports has now been converted to exemptions. Items of multiple use and finished articles to be excluded from the list of reduced GST items @ 2% within the 5 export oriented sectors. Extension of list of items on which GST will be chargeable on retail price basis. With withdrawal of GST exemption on import of milk preparations etc. and officials vehicles of President, Prime Minister and Governor. FED is to be imposed on locally produced edible oil. Rate of Withholding on case withdrawal from banks has been increased from 0.2 to 0.3% above an amount of Rs.50,000/-
The announcement by Finance Minister that the notorious circular debt of Rs.500.0 Billion is going to be resolved within 60 days is welcomed by business community but a clear road map is missing from budget documents.
The New Budget 2013-14 has put further tax burden on those who are already crushed under the heavy taxes and draconian tax laws while no effort has been made to broaden the tax net and bring the influential and powerful evaders into the tax net.
KCCI states that Additional GST of 2% on sales to unregistered will put the onus of recovery on the registered and legitimate registered tax payer. It is the responsibility of FBR to expand tax net and bring unregistered persons in to the net. This will lead to under reporting of sale value of goods and will divert the business to undocumented segment at the expense of documented economy. It will also lead to the re-emergence of flying invoices phenomenon. Therefore, the measure should be reversed and 2% additional sales tax to unregistered buyers should be withdrawn.
KCCI opines Wealth tax should only be applicable to the assets owned by unregistered persons while the existing registered persons who regularly file returns should be exempt from further taxes and from wealth tax. This will broaden the tax base and lead to netting the tax evaders.
For more information, contact:
M. Shafiq Baig
Public Relations Officer
Karachi Chamber of Commerce and Industry (KCCI)
Aiwan-e-Tijarat Road,
Shahrah-e-Liaquat, Karachi-74000
Tel: +9221 9921 8001 -09
Fax: +9221 9921 8010
Email: pro@kcci.com.pk, pro2@kcci.com.pk
Website: http://www.kcci.com.pk/