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Budget Proposals: APBF stresses investment on energy, law & order

20th May, 2015

Lahore (Press Release) – Stress on investment in energy solutions and enforcement of law and order topped the proposals presented by the All Pakistan Business Forum for the federal budget 2015-16 to the Finance Ministry and Federal Board of Revenue.

Promoting foreign direct investment (FDI), increasing the share of direct taxes in revenue and lowering the slab of indirect taxes would help achieve key economic targets set for the next fiscal year, said APBF President, M. Ibrahim Qureshi.

The APBF budget proposals cover recommendations, including proposals to incentivize investors, broaden tax net through documentation of economy, simplify tax system and reorganize FBR and many industry specific proposals.

He said that the APBF, in its Budget proposals, also suggested that the sales tax slab should immediately be curtailed in order to reduce inflationary pressures. “APBF has urged the government to reduce sales tax to single digit and also cut corporate tax to make the upcoming budget business-friendly.

Unveiling budget proposals on Tuesday at APBF head office, Ibrahim Qureshi said that only political will and drastic steps can revive the economy, which should be grown significantly and constantly for visible impact. He advocated the need for raising the country’s tax base so that tax-to-GDP ratio improves from current 9%.

“APBF has given very detailed proposals for broadening tax base and identifying new potential taxpayers. It recommends that all income earners should pay taxes equitably, including on income from agriculture related activities and all kinds of government and banks saving schemes. All income earners without exception of any sector should be registered with proper national tax number (NTN). Tax authorities should ensure all NTN holders file annual income tax/wealth returns and wealth reconciliation statements. The culture of amnesty schemes should be completely eliminated as it discourages honest taxpayers. On Sales Tax APBF proposed Sales Tax rates should be reduced to single digit or at least in line with regional countries.”

Ibrahim Qureshi added that the proposals had input from all members across the country, and that no proposal will impact negatively in revenue collection.

“In order to tackle the energy shortages, maximum funds should be allocated for construction of dams or water reservoirs, tapping of Thar Coal, completion of Iran-Pakistan gas pipeline and early solution of LNG related issues. At least 15% of the total budget should be allocated for Hydro power projects, it stresses. Reliance on costly thermal power has been jacking up the cost of production and the import bill as well. “The country is in dire need of an urgent shift in its energy-mix in favour of Hydro power and local fuels. Use of biogas should be promoted throughout the rural sector both for electricity generation and gas for cooking besides producing bio fertilizer.”

It has been stressed in APBF Budget proposals that the sales tax and income tax return forms should be made simple and standardized so that taxpayers do not have to face the hassle of new tax return forms on an annual basis.

The APBF believes that sales tax should be non-adjustable and non-refundable and be collected at single stage at import or manufacturing. In value-added chain industry, GST should be collected at 0.5% on each stage of value-addition to complete the chain.

“We also demanded to cut the corporate tax rate annually to bring it down to 25% over the next three or four years from the current rate of 33% while individual income tax exemption should be raised.”

The present state of law and order has been hurting Pakistan’s potential as a highly-attractive investment destination. Foreign and local investors have been shying from operating in Pakistan. Sizeable funds must be allocated for improving law and order situation. Rising risk perception about investing into Pakistan has been hitting hard the Foreign Direct Investment

That fell sharply in recent months and needed to be tackled through a comprehensive policy approach by involving business community. All the developed countries accord special importance to economic issues and the challenges but in Pakistan, economy has been on the bottom of policy makers’ to-do list.