Caretaker govt has no mandate to tax, make budget, say businessmen

Terming the proposed mini budget as a “drone attack” on the already troubled trade and industry, traders and industrialists the country’s financial hub said the interim government has no mandate to introduce a budget.
Calling upon the Federal Board of Revenue (FBR) to call a round-table meeting with all concerned stakeholders present, almost all major representative bodies of the business community warned of disastrous consequences for the ailing economy, particularly exports and remittances, if the proposal materialised.
The caretaker federal government is reported to have introduced a mini budget worth Rs 152 billion through promulgating a presidential ordinance. The interim fiscal document, however, is awaiting President Zardari’s nod which, according to Presidential Spokesman Senator Farhatullah Babar, has so far not been given.
Dubbing the FBR as an “enemy” of Pakistan, traders and industrialists said the board was further burdening taxpayers only to increase what KCCI President Haroon Agar said was its “unofficial income”.
“First of all, it is not the caretakers’ mandate to introduce a budget,” claimed the KCCI president who along with M Zubair Motiwala and other office bearers of the chamber is slated to address a briefing on Friday (today) at the KCCI on the mini budget.
Further, Agar said much of the proposed taxes in the mini budget were of a refundable nature.
“Almost all of the taxes in the Rs 152 billion budget are to be refunded later, so this budget would serve no purpose but open up a window of corruption,” the KCCI chairman said while talking to Pakistan Today.
Moreover, he said the FBR instead of broadening the existing below-10-percent tax-to-GDP ratio, was imposing more taxes on the taxpayers only to cushion its low tax collection. “We demand that the elected government decide these issues in the federal budget,” Agar said, warning that the move would adversely impact the government’s $ 90 billion three-year exports target.
Slamming the caretaker government for “exceeding its mandate”, FPCCI President Zubair Ahmed Malik said it was unacceptable. “Whatever they plan to do should be in the federal budget and by the elected government,” he said.
Linking the proposed mini budget to the credibility of next PML-N-led government, Malik said Khwaja Asif, a PML-N stalwart known for moving courts on national issues, would also have to question the introduction of this caretaker-backed budget in the manner he challenged appointments by the interim government.
The FPCCI chief said he would soon declare his future line of action after taking his executive committee and chamber members in confidence.
Malik urged the FBR to convene a round-table meeting with business leaders under FPCCI to discuss all major issues pertaining to the federal budget 2013-14. “Misconceptions are cropping up before the announcement of budget,” he said.
A strong reaction also came from the SITE Association of Industry which in an urgent meeting vowed to resent any budget unveiled by anyone other than the newly-elected government.
“The industry which already suffered due to strikes and riots is now going to be hit with a drone attack in the form of a mini budget,” said SITE Association of Industry Chairman Dr Arshad A. Vohra.
The association’s executive committee agreed that the move, full of heavy taxes before the end of fiscal year 2013, was aimed at sabotaging the country’s already crippled economy as well as the worst-affected business community.
“The SITE Association of Industry appeals to the president of Pakistan to not sign any mini budget through presidential orders and let the new government decide the matter on its own,” the chairman said.
The budget in question envisages an increase in sales tax from 16 to 17 percent; further tax of 2 percent on unregistered sales; turnover tax to be increased from 0.5 percent to 1 percent; 0.2 percent withholding tax on cash withdrawals from banks to be increased to 0.3 percent; income tax on exports proceeds to be increased from 1 percent to 1.5 percent; withdrawal of zero-rated tax on domestic sales of five sectors that include textiles, leather, carpet, sports and surgical.
The GST on sugar is also to be increased from 8 percent to 17percent; a 5 percent tax on the value of new cars to be purchased and 10 percent withholding tax on all domestic electric bills with consumption of more than 1,000 units.