LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) on Saturday released its proposals for the 2022-23 Federal Budget at a press conference on Saturday.
LCCI President Mian Nauman Kabir presented the budget proposals while Senior Vice President Mian Rehman Aziz Chan and Vice President Haris Ateeq also addressed the occasion.
Mian Nauman Kabir said the private sector is the engine of growth and its proposals should be part of the 2022-23 federal budget. He said that in developing countries, the private sector generates 90% of jobs, finances 60% of all investment and provides more than 80% of government revenue. In this regard, feedback from the private sector plays a fundamental role in formulating appropriate policies for trade, industry and the economy. The strong link between government and the private sector stimulates the economy, creates an enabling environment, generates jobs, attracts investment and contributes to the growth of the SME sector.
“All the political parties must sign an economic charter and follow a single economic policy which must be drawn up in consultation with the stakeholders,” added the president of the LCCI.
He said that as the first chamber in the country, the Lahore Chamber of Commerce and Industry has formed a set of proposals for the Federal Budget 2022-23 which is a composition of the issues facing the business world and recommendations for their best possible solution.
Mian Nauman Kabir said Pakistan’s tax base is narrow. Out of a total population of 220 million, only about 3 million people file their tax returns. It is proposed that all persons with industrial or commercial electricity or gas connections be included in the tax net. Similarly, any person registered for income tax, if eligible for registration under the Sales Tax Act 1990, must also be registered for sales tax purposes. A broad base will increase revenue and help reduce the burden on existing taxpayers.
The LCCI President said that to eliminate uncertainty among businesses and for sustainable growth, there should be consistency in economic policies (both macro-economic and sectoral). For example, taxation via a mini-budget and changes via SROs negate policy coherence and predictability, harming investment, exports, manufacturing, the business community as well as end consumers. .
He said SMEs are the backbone of the industry. There are up to 5.2 million SMEs in Pakistan with a 25% share in exports and a 30% contribution to GDP. In view of the vital role of SMEs, it is proposed that the turnover threshold for the definition of SMEs could be raised to eight hundred million rupees net of sales tax, FED and rebates.
Mian Nauman Kabir said that with regard to Tier I retailers, it is proposed that the area specification condition can be removed, said store retailer exempted from POS integration and unit consumption. electricity can be used as a parameter instead of electricity cost. Additionally, for retailers operating in a mall, plaza, or air-conditioned center, an area of 500 square feet or more may be specified.
He said streamlining tariffs was urgent. To protect and promote local industry and to substitute imports, customs duties on imported raw materials may be reduced to a minimum or to zero percent. Similarly, the importation of finished goods and luxury goods can be discouraged by levies or increased regulatory duties.
The President of the LCCI stated that FBR in 2018 granted sales tax and income tax exemptions to industries based in the former FATA/PATA on imports of certain raw materials for their consumption under the SRO 889(I)/2018, 890(I)/2018 and 1213(I)/2018. In addition, exemption from the FED has also been granted to industries based in the former FATA/PATA since July 1, 2021. These raw materials are imported and sold in Punjab, resulting in high tax evasion. This misuse seriously harms regular industries based outside of FATA/PATA, especially the foam industry and steel melters, etc. This issue requires immediate attention to resolve the issue.
He said that the production of various steel products is determined at a uniform rate without taking into account the realities on the ground. It is proposed that the production per ton of iron and steel products be determined on the basis of a consumption of 800 kWh of electricity for small iron and steel furnaces with a production capacity of 5 to 10 tons so that they can survive.
Mian Nauman Kabir said the imposition of a 17% sales tax through the Complementary Finance Law 2022 (mini budget) on items such as capital goods, factories, machinery and equipment , raw materials (EPZs were not spared either) Effluent Treatment Plants (ETPs), Renewable Energy Equipment (Solar, Wind and Geothermal), Health Care Products, Hybrid Seeds, Bovine Semen , animal and fish feed, flavored milk, yogurt, cheese, butter, cream, Desi ghee, whey, milk and cream, poultry ingredients animal feed and other agricultural products caused inflation, increased the cost of doing business, compromised the ease of doing business and increased the cost of goods for end consumers. It is proposed to rationalize tax rates.
He said the chambers of commerce and industry meet all the prescribed criteria for a charitable organization and provide services to the business community for the promotion of trade and industry. This position has also been accepted by DAIR. FBR is requested to include Chambers of Commerce and Industry in sub-clause (1) of clause 66 of Part I of the Second Schedule to the Income Tax Ordinance 2001 for total income exemption.
Mian Nauman Kabir added that the energy mix should be made more sustainable and profitable by reducing dependence on imported oil for electricity generation and increasing the share of hydroelectricity and renewable energies (wind, solar, biomass, etc.). To promote the solar sector, duties and taxes on solar equipment must be reduced to zero. The electricity tariff for all sectors should be reduced by eliminating taxes. The gas tariff should also be reduced for the industry.
He said that in order to reduce the cost of doing business and provide relief to consumers, the current policy rate of 12.25% should be reduced to 5% in line with regional economies. Regional interest rates are (India 4%, Bangladesh 4.75%, China 3.85% and Sri Lanka 5%).
Mian Nauman Kabir said tax laws, procedures and reporting should be simplified. A one-page feedback form should be introduced. There should be one audit for sales tax, income tax, and withholding tax. The frequency of this single audit should be reduced to once every 3 years. Discretionary powers under sections 138, 175, 177, 214C of the Income Tax Order 2001 and 25, 37, 38A, 40, 40B and 48 of the Sales Tax Act 1990 should be minimized in consultation with stakeholders. To reduce the cost of doing business, the government should reduce the withholding tax rate. Since most businesses operate with very low profit margins, the 4.5% withholding tax rate should be reduced to between 1% and 0% to ensure that businesses do not face problems. of liquidity. To eliminate taxpayer hardship, the stay order granted by the Inland Revenue Appeals Tribunal must remain valid until the appeals are decided.
LCCI Senior Vice President Mian Rehman Aziz Chan said that to promote a favorable business environment, the sales tax rate should be lowered. He said the minimum tax should be reduced from 1.25% to 0.5%. Income tax deducted under various provisions of the law may become an adjustable tax instead of being treated as a minimum tax.
LCCI Vice President Haris Ateeq said that for the growth of the industry and the enhancement of exports, the tax levied on imports of raw materials u/s 148 of the Tax Ordinance 2001 revenue by manufacturers and exporters is expected to be 0%. To stimulate exports from the leather sector, raw hides and skins should be included in the definition of farm income. Income tax refunds should be processed quickly through an automated system modeled on sales tax refunds.
LCCI board members said the disclosure requirement for CNICs for sale to unregistered individuals should be abolished in the broader interest of the country’s small businesses during these tough economic times. Many members of the business community have reported receiving notices of fines, penalties and tax collections. This causes serious problems for the business world. Fines and penalties should not become a source of revenue. This practice must be stopped immediately. In addition, for the assignment of agents to commercial premises and in the exercise of issuing collection notices, the business community must be taken into account.
Copyright Business Recorder, 2022