Industrialists fear budget will kill exports

Describe FY25 budget as confused attempt that threatens economic stability

KARACHI:

Industrialists and exporters have expressed concern over the federal budget for fiscal year 2024-25 and described it as a confused effort. They believe that the proposed initiatives will destroy exports while causing hefty losses to the country in terms of foreign exchange earnings.

Lasbela Chamber of Commerce and Industry President Ismail Suttar dubbed the document as a confused budget, claiming that the “masters” did not want economic stability in the country.

“Imagine a country which fails to support its exporters, what else can we expect from a budget which converts the 1% presumptive tax regime into normal taxation, which is either 35% or 49% on profits,” he said.

“I remember discussing this point with the then finance minister, Ishaq Dar, just last year in one of the sessions before the budget, when they were thinking on these lines, and he told me categorically to go and announce that this will never be agreed,” Suttar recalled.

However, just after one year, he said, the new tax regime for exporters was part of the budget, which would kill exports, and even those few industries which had room would have no option but to go for under-invoicing, depriving Pakistan of the much-needed foreign exchange.

The export industry needed support and handholding rather than being taxed, he remarked and urged the finance minister to immediately reverse the decision and even reduce the 1% presumptive tax to 0.5%.

“We should have boundaries defined so that the next time when they sit with the International Monetary Fund (IMF), all could know on which points we are not in for negotiations.”

Commenting on the FY25 budget, Site Association of Industry (SAI) President Muhammad Kamran Arbi called it a laughing stock as the government was toying with both industrialists and exporters.

Small and medium enterprises (SMEs) are the backbone of any economy but unfortunately the government has increased the tax on SMEs from 35% to over 45%, he lamented.

Arbi cautioned that high taxes on exporters’ profit and income would prevent them from declaring their actual earnings because they would be heavily taxed.

The government must know that Pakistani’s goods are more expensive than its regional competitors in the international market, he pointed out and asked “how our exporters will be able to compete with their regional counterparts?”

Though the government desires to provide incentives to the solar industry, the industrialists are compelled to purchase gas and electricity at exorbitant tariffs, which are already out of their range. “How can they sell their products at lower rates, if they consume energy at record high costs,” he said.