There is a visible concern for
From SHAMIM AHMED
Jul 03 - 09, 2000
A mixed response has been received from different quarters in respect
of the budget for the financial year 2000-2001 announced by the Finance Minister Mr
Shaukat Aziz on Radio and TV late on Saturday night. Industry & trade circle have
termed the budget as business friendly and export oriented. Some of the Associations have
described as ideal under the prevailing economic conditions while the independent
economists deem it to be too optimistic.
The business community has said the budget is a sincere effort to boost
the economy but the analysts see a number of mini-budgets in the near future. As the
optimistic revenue target envisaging an increase of about 25 per cent could hardly be
achieved, this will head to mini-budgets to meet the shortfall.
Most of the traders and industrialists welcomed the budgetary measures
including the abolition of wealth tax and increase in public sector development programme.
Small traders had divided opinion on the budget. A group supported the budgetary measures
and other found it against them.
Rawalpindi Chamber of commerce and Industry (RCCI) President S.M.
Naseem terming the budget 2000-2001 as balanced said it was an ideal budget in the present
economic situation in which bold decisions had been made.
In a statement issued here on Sunday, the RCCI Chief said the economic
measures proposed in budget would have positive effects on the economic development and
exports of the country. He appreciated government's commitment to self-reliance, increase
in education budget and relief announced for various sections of the society.
S.M. Naseem said, abolishment of Wealth Tax, a long standing demand of
the trader community, would increase the growth of capital, and withdrawal of customs duty
on the raw material used in some local industries would help strengthened the industrial
sector of the country. He said tax concessions on import of sugar would help keep the
price of sugar within the reach of ordinary person. The facilities announced for Ghee
mills were also a step in right direction, he added.
Former vice President of FPCCI and Ex-State Minister of Industries,
Younis Elahi Sethi has termed the national budget 2000-2001 as 'suitable' for prevailing
economic conditions of the country He said, initial review of the budgetary documents
reveal that government has prepared this budget with great hardwork and if the policies
formulated in it were followed in letter and spirit, the economy of the country would
Younis Elahi also praised measures announced in the budget for revival
of industries specially the sick ones and measure to reduce the budget deficit from 6 per
cent to 3 per cent. All Pakistan Textile Processing Mills Association (APTMA) Chairman has
termed federal budget for the year 2000-2001 as positive, balanced and most daring in the
prevailing economic scenario. He said that measures have been proposed to discourage
unnecessary imports, encouraging exports, appointment of Tax Ombudsman, abolition of
Wealth Tax revival of sick units with special stress to promote small and medium sized
industry, encouragement of Corporate sector and reduction in number of taxes are some bold
steps taken in the federal budget to reshape the economy.
The exporters have highly lauded the budget for 2000-2001 especially
the announcement about abolition of wealth tax, special exchange mechanism for currencies
of the trading partners and more export refinancing for value-added exporters. Javed
Chinoy, Central Chairman of Pakistan Ready-made Garments Manufacturers and Exporters
Association (PRGMEA), said that the budget was a truly export-oriented budget which has
laid special emphasis on incentives to the value-added sector which was ignored in the
past. He said the government had accepted PRGMEA's demand contained in its budget
proposals for abolition of wealth tax which was the main source of increase in black
money. He expressed the hope that the measures taken in the new budget would go a long way
in boosting exports to the targets set by the government.
Shabir Ahmed, Chairman of Pakistan Bedwear Exporters Association (PBEA)
has criticised the increase in tax on exports which would hurt exports. He welcomed the
abolition of wealth tax and said that no measures were announced to prefer export to
value-added products over raw materials such as cotton and yarn. He demanded immediate
withdrawal of export refinance allowed to the yarn exporters.
Referring to the announcement of introduction of 'no duty no drawback
scheme' Shabir said that the scheme would only benefit only large textile units and while
the smaller units would become incompetitive in the export market. He advised the Finance
Minister to consult the trade before finalising the scheme. He said the export target of
12 billion could only be achieved when the export of raw material such as cotton and yarn
is restricted and export of value-added sector is encouraged.
According to independent economists, the budget is optimistic as it
proposes a nearly 20 per cent increase in the development budget and 24 per cent in the
collection of the Central Board of Revenue (CBR) next year. It is also optimistic when it
proposes to decrease the debt servicing by 2.6 per cent and the defence budget by nearly
seven per cent, though this has been achieved partly by transferring Rs.26 billion of
military pension to the civil administration head. It is most optimistic when it assumes
that next year it would collect as much as 44 per cent more from the sales tax head of the
revenues. This optimism looks misplaced if a quick analysis of the performance of the
annual budgets in the last several years is done. And if what happened to the current
year's budget is any indication, then the budget 2000-2001 presented by Finance Minister
Shaukat Aziz on Saturday can only be described as a wish-list of a man with his head in
What is more confusing is the projection of Rs.9.755 billion as wealth
tax collection next year. It is a 127 per cent rise over the current year's wealth tax
receipts of Rs.4.3 billion. How could this sudden and sharp rise in wealth tax revenues
come about when this tax is to be eliminated after June 30 next year. We have not been
provided with any convincing explanation either in the budget papers or by the finance
This is certainly a budget based on hope and wishes if that can be
materialised through tax reform, documentation of economy, eliminating corruption and
creating tax culture as planned and announced by the Finance Minister, the budget is most
welcome which has offered some thing to all groups of people ranging from richman paying
or evading wealth tax, to the salaried class, teachers and researchers in particular and
those involved in promoting the emerging science of information technology.
The most gratifying aspect of the new budget is its visible concern for
the plight of the poor. It has advisedly proposed a number of concrete measures for
poverty alleviation like the launching of an integrated small public works programme
costing Rs.15 billion, the food support programme in which about 1.2 million poorest
households will receive an annual cash subsidy of Rs.2000, an increase in the monthly cash
transfer under the Zakat scheme from Rs.300 per month, to Rs.500 per month and the
launching of the micro-credit bank from August 14. The allocation made for all these
programmes is more than Rs.83 billion which is almost exactly the amount the budget
expects the CBR to collect over and above what it has collected this year. A tall order,
no doubt, but any slippage like this year on this score would only add to the plight of