Mini-budget to dent investor confidence

Cost of doing business, inflation will rise due to new taxes

LAHORE:

The imposition of taxes, through the Finance Supplementary Bill, will further increase the cost of doing business and inflation in the country, cautioned Lahore Chamber of Commerce and Industry (LCCI) President Mian Nauman Kabir.

In a meeting with industry stakeholders on Tuesday, Kabir lamented that the move would shatter the confidence of domestic and foreign investors and hinder business growth.

By withdrawing sales tax exemption on solar panels, the government was also discouraging the use of alternative energy resources, he added.

He was of the view that the levy of taxes on food items, greenhouse farming equipment, raw material of engineering and pharmaceutical sectors would add to the economic woes.

“At a time when the trade and industry needs supportive measures, the government has imposed taxes on various sectors in order to meet conditions of the International Monetary Fund.”

Elaborating, Kabir pointed out that 17% sales tax worth Rs343 billion was being imposed on more than 150 items, including machinery, pharmaceutical and imported food items.

“Imposition of sales tax on imported machinery will make it difficult for our industrial sector, particularly small and medium enterprises, to undergo technology upgrade,” he said, adding that it would adversely impact the country’s export competitiveness.

“This can start a new wave of deindustrialisation in the country,” he remarked. “Hi-tech manufacturing sectors will also be affected by the proposed measures in the mini-budget.”

The government has recently introduced the Mobile Device Manufacturing Policy to encourage the production of mobile phones.

Published in The Express Tribune, January 12^th, 2022.

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