NEW INFLATIONARY SPIRAL ALL SET TO START
June 13 - 19, 2011
In the wake of multiple challenges posed to the government on economic front, people had little hope of announcing any relief package in the budget 2011-12 by the government. Although the national economy is in bad shape but rulers' inability to streamline the things is a big question mark.
Stringent measures were needed to not only broaden the tax net but also to stop wastage of national resources on public sector entities that are taking around 300 billions of rupees every year.
Trade, industry, and the common persons get nothing from the budget 2011-12 while a new inflationary spiral is all set to start due to the steps taken by the government in the budget.
Experts believe that imposition of tax on agriculture produce will affect consumers as it will be collected from the Arhtis and dealers and they will shift the burden to the end users while the agriculturists have been exempted again.
They maintained that budget 2011-12 offers little of betterment to the common persons. PSDP allocation is still dismally low that would provide fewer opportunities of jobs.
According to them, imposition of tax on grains would affect the common persons. This tax should be imposed on agriculture income instead of produce while the tax amount needs to be spent on the infrastructure development of people from whom it was collected.
Exports played the role of backbone in economy but the present government had ignored it completely, an exporter Mian Faraz Alam said. He said Sialkot exports of 15 goods were worth $1.25 billion every year while Pakistan had monopoly in surgical goods and football globally but the neglect by the government might lose Pakistan's market position while China and Vietnam would capture Pakistani's football market.
A leading businessperson Mohammad Pervaiz Malik said nothing was announced for industrial sector in the budget while export orders were being cancelled due to non-availability of electricity and gas. He said the finance minister had not consulted the chambers. If the finance minister was unaware of the common person and industrial sector problems then how he could give a good budget for them, he said. He said no relief was given to anyone in the budget, adding that the government was running on advance and withholding taxes only while the FBR had failed to broaden the tax net. He said if the government would collect sales tax properly then it would not have to go for any other tax.
An agriculturist Mansoor Ahmed said the government had created ambiguity after imposing 3.5 percent tax on agriculture produce while it was yet to be cleared who would collect this tax and what would be the mechanism.
The Lahore Chamber of Commerce and Industry (LCCI) has demanded of the government to impose agriculture tax without any further delay and ensure business community representation in all economy related policymaking government bodies and institutions.
The LCCI Acting President Sheikh Mohammad Arshad while chairing a post-budget discussion with Anjuman-e-Tajiran at Lahore Chamber of Commerce and Industry, said the agriculture sector share in GDP is 22 percent but unfortunately its share in revenue is negligible and the only existing tax payers are burdened every time unjustifiably. He said that by taking agriculture sector into the tax net, the government would be able to achieve revenue target with ease.
The LCCI Acting President further said that only due to little representation of stakeholders in policy making bodies and institutions, the economy is facing a sharp decline. "Had the private sector been taken onboard in policy making process in the past, the economic situation today would have been quite encouraging."
The LCCI Acting President also urged the government to rationalize duties on petroleum products as the huge profit being pocketed by the government was not only making Pakistani merchandise uncompetitive in the global market but it was also earning bad name for the government as the same is putting a very negative impact on economy and hitting all the sectors alike.
To cope with energy shortages in the long-run, Sheikh Mohammad Arshad said that there was a dire need to focus on construction of water reservoirs as it is the only solution to ensure cheaper electricity. He said that the government should bring down the interest rate to single digit for being a prerequisite to expedite the process of industrialization and the taxable limit for income tax should be increased to Rs400,000. Due to harassment of the tax officials the people are not willing to come into tax-net, the system of the tax department should be reformed to encourage new taxpayers. The discretionary powers of tax departments and its officials should be curtailed. He said that chambers and trade associations should be taken into confidence before issuing notices to the businesspersons who are contributing to the economy despite difficult economic scenario.
Sheikh Mohammad Arshad said that the LCCI acts as a bridge between the government and the business community. It also tries to ensure a business-friendly environment through sharing views with the government and by taking all the stakeholders onboard on all the economy related issues.
Speaking on the occasion, President Anjuman-e-Tajiran Mohammad Ashraf Bhatti assured the LCCI Acting President of his fullest support for the cause of business community. He said that it was very unfortunate that the business activity had gone down to alarming levels but the government had failed to give any concrete plan to expedite economic activities.
Corruption, bad governance, ineptness of policy makers and will to steer the country out of prevailing economic crises are stated to be main hurdles in bringing economic prosperity. Every one who are earning beyond their limits needs to pay taxes in the larger national interest. Corruption would have to be eliminated with full force.