Govt key challenge is to restrict fiscal deficit in budget 2020-21: PIAF
As the government is going to announce the Federal Budget for fiscal year 2020-21 on June 12, the Pakistan Industrial and Traders Associations Front has asked the authorities to take into account the implications of COVID-19, providing maximum relief to the trade and industry by focusing not only sustaining existing jobs but also generating new employment.
PIAF chairman Mian Nauman Kabir, in a joint meeting of a number of trade and industrial sectors, which was also attended by PIAF senior vice chairman Nasir Hameed Khan and vice chairman Javed Siddiqi, suggested the government to make visible reduction in taxes, helping revive the businesses, which are near to bankruptcies owing to worldwide lockdowns amidst coronavirus.
He observed that the key challenge for the government will be restricting the fiscal deficit for the upcoming year as not only the government will have to factor in higher expenditures relating to COVID-19 outbreak, but also take hit on revenues because of the slowdown in overall economy. He urged the government that major focus should be on relief to especially documented and registered SMEs rather than new taxation measures.
The chairman said that PIAF has taken all trade associations on board for preparation of proposals for the budget in view of providing government a set of suggestions to make the budget business-friendly.
Mian Nauman Kabir observed that the impact of Covid-19 has badly affected business and industries, stressing the government to bring down sales tax to single digit while key policy interest rate to at least 5 percent in order to facilitate growth of business activities, improving revenue, besides helping economic revival.
Keeping in view of the difficulties of business community the government would have to reduce the cost of doing business, encourage new investment, promote industrialization and create millions of new jobs to come out of pandemic crisis.
PIAF senior vice chairman Nasir Hameed Khan recommended the government to defer electricity and gas bills of the whole businesses for a period of six months. He proposed the government that source of income should not be asked on any kind of investment in all sectors of the economy for the next two years in line with the exemption given to the construction sector.
Nasir Hameed Khan proposed that amid Covid-19 scenario the government should defer interest payments of the businesses for at least six months, besides reducing power tariff for all trade and industrial sectors to 7.5 cents/kwh.
With a view to improve the access of finance to SMEs, the PIAF proposed that the government should introduce a scheme of interest-free loans for the documented and taxpaying SMEs. Besides, the existing credit limits of the trade and all kind of industry which have taken loans from various banks should be enhanced.
PIAF vice chairman Javed Siddiqi urged the authorities that the ratio of taxation and import duties should be brought down significantly, besides waiving of income tax and additional income taxes with an ultimate objective of extending support to the trade and industries to ensure their survival. Moreover, the PIAF vice chairman recommended a reduction in sales tax from 17% to a single digit, besides suggesting to reduce the WHT rate to 1%.
Javed Siddiqi said that low cost of inputs and compatible energy prices would help promote ease of doing business and make Pakistani products competitive in the international market where the country had to compete with many regional countries.