Increase in GST to erode disposable income

The increase in general sales tax (GST) would erode disposable income and therefore the budget 2010-11 is not too “people-friendly”, said Patron-in-Chief of Port Bin Qasim Association of Trade and Industry (PQATI) Ilyas Khanani while commenting on the budget on Monday.

He said that the increase in income tax threshold to Rs300,000 is encouraging but the government needs to widen the tax net by setting fixed income tax rates for small and medium businesses.

“The government should have announced measures for financial discipline and a concrete action plan to reduce inflation to single digit,” he added.

The Patron-in-Chief and Chairman of Korangi Association of Trade and Industry, S M Muneer and Razzak Hashim Paracha said that withdrawal of exemptions would have an adverse effect on export-oriented industries, completely damaging the country’s export base.

They said that it is feared that elimination of GST or value added tax (VAT) on export-oriented industries would hurt major exports as they could never bear the burden of 15 per cent VAT.

Traders and industrialists of Islamabad also said that the budget 2010-11 has not announced any worthwhile relief measures for them, rather, some actions taken in it would push up the cost of doing business and promote smuggling of many items.

They said some incentives should have been announced for the revival of industry as it has suffered badly due to energy crisis and many other factors.

The President of Islamabad Chamber of Commerce and Industry, Zahid Maqbool said that the budget has increased the tax rate for small companies which will have a negative impact on the growth of business activities.

He said that the increase in federal excise duty on natural and petroleum gas would also push up production costs. He said that 0.3 per cent advance tax on various banking transactions would also put extra financial burden on the businessmen as they often have to resort to these transactions for running their business.

The President of Lasbela Chamber of Commerce and Industry, Yaqoob Karim also declared the budget totally unfriendly for the people, adding there was also no relief for the businessmen in it.

He stated that exempting the agricultural sector from tax yet again was an unwise move, adding the government also failed to announce effective measures for increasing exports.

Karim said that he was also surprised by the fact that in the budget no measures were announced for curbing smuggling under the Afghan Trade Transit. He highlighted that these points should have been given priority and included into the policy but the government failed to do so.

Published in the Express Tribune, June 8^th, 2010.