Industrialists propose industry-focused budget
PHOTO: FILE
Eminent industrialists in Karachi have urged the government to implement proposed budgetary measures for the federal budget 2024-25 to drive industry-led economic growth in the country. They stressed the importance of halting deindustrialisation and promoting reindustrialisation.
In the budget proposals submitted to key stakeholders including the prime minister, finance minister, State Bank of Pakistan (SBP) governor, and Federal Board of Revenue (FBR) chairman, Muhammad Kamran Arbi, President of the Site Association of Industry (SAI), highlighted that the industrial sector contributes 20% to 22% to the GDP and shoulders over 50% of the national tax burden.
Arbi cautioned against jeopardising the vital industrial sector, stating, “For increasing the tax-to-GDP ratio, the government should bring untaxed and undertaxed sectors into the tax net. Overburdening the crucial industrial sector conflicts with Pakistan’s economic development goals.”
SAI’s recommendations cover four policy areas: fiscal, monetary, trade, and energy policies. They propose substantial reductions in direct and indirect taxation on industries, corporate taxation, dividends, and salaries. The proposals also call for removing unnecessary restrictions on importing industrial inputs, implementing a single cascaded rate of import tariffs on these inputs, and removing additional and regulatory duties. Additionally, they advocate for a predictable forex regime with 12-month cover for imports and exports, revising energy policies to reduce electricity and gas tariffs for industries, and progressively reducing policy rates to stimulate industrial and economic growth while lowering lending rates for industrial projects and exports to single digits.
The SAI stressed that the federal budget should take a strategic direction beyond mere number crunching, emphasising prudent debt management under the Fiscal Responsibility and Debt Limitation Act, 2005. It should prioritise allocations for national exigencies, particularly for reindustrialisation, enable prudent economic, social, and regulatory policymaking, ensure transparency, accountability, and responsible public spending, and drive economic growth by stimulating investment and job creation.
Meanwhile, Iftikhar Ahmed Sheikh, President of Karachi Chamber of Commerce and Industry (KCCI), proposed uniform withholding tax (WHT) rates on imported chickpeas and lentils/pulses at 2% for both commercial and industrial importers.
To address tax exemption misuse and restore fairness in the import sector, the government should end tax exemptions granted to Ex FATA/PATA regions by June 2024. This action will level the playing field, enabling effective competition in local markets, he said.
Tax incidence should be consistent for all importers/exporters of the same goods/items across the board. In various industries, customs duty reductions are recommended, including 20% for automotive, 5% for pharmaceuticals, 0% regulatory duty and 5% custom duty for steel, and 10% custom duty for paper and paper-related products.
Published in The Express Tribune, May 21st, 2024.
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