- Mixed reaction of businessmen on budget 2016-17
Most of the industrialists especially the owners of textile mills have appreciated the budget speech of Federal Finance Minister Ishaq Dar who announced dropping taxes on five export-oriented sectors.
Dar on Friday announced zero rated tax on exports of value-added textile, leather, sports, surgical goods, and carpet industry in his budget speech in the National Assembly.
In order to further enhance the export competitiveness of the textile sector, the new budget envisages extension of the existing scheme on drawback of local taxes for the next year. Technology up-gradation fund scheme for the textile sector has been formulated to benefit SMEs to invest in new technologies to make Pakistan’s exports globally competitive.
The mark up rates on export refinance facility, which was 9.5 per cent in June 2013, will be brought down to three per cent from July 1. Textile, leather, sports goods, surgical goods and carpets will be made part of zero rated tax regime from the next fiscal year 2016-17.
Bringing the export duty at zero per cent on all major exports was a long-awaited demand of all export-oriented sectors and the finance minister, in his speech said, “Now the long-awaited demand for export-oriented sectors has been accepted while their refund would be given by August this year.”
“The textile exports which are almost 50 per cent of the total exports of the country will increase many times after this decision of the federal government in the upcoming years as the ministry,” KCCI President Younus M Basheer said. Almost all the exporting sectors of the country were demanding zero rated tax regime, he added.
Another KCCI member said that the government has given all incentives to the agriculture sector in this budget, while they did not announce any incentives for the poor people. “The government did not announce any incentive for reduction in power and gas prices for industries, which they were expecting in this budget,” he said.
The agri production had already been running in negative in 2015-16 and if the government did not announce any incentive for them, the agriculture of the country might have collapsed in the fiscal year 2016-17.
The member said the government’s incentive in the agriculture sector will not benefit poor farmers, but the incentives announced by Ishaq Dar are only for those who have huge agri lands and agriculture machineries or having agri-related industries and poultry farms etc.
For the budget 2016-17, the government did not take decision for reducing the prices of routine commodities like pulses, wheat, sugar and other necessary goods, said another businessman.
Ishtiaq Bag, a prominent businessman, declared the budget as the worst one announced by the Nawaz Sharif government. “The announced budget will not give any benefit to the poor, but will create more problems for them. We cannot say it is a friendly budget,” he added.
A general secretary of an association of a mobile market said the decision of the federal government will support the mobile smugglers as they never paid taxes in the past; they will not these taxes in the future as well.
The recent increase in the tax on new mobile phones will further enhance the smuggling of used mobile, as there are already a flood of smuggled phones in the mobile market. It is estimated that 250,000 to 300,000 smuggled phones are being sold in Pakistan.
The business communities ‘however’ appreciated the reduction in custom duties on agri and textile machineries in the budget.
Meanwhile, some senior businessmen termed the budget 2016-17 very technical and said they will comment on it after a comprehensive review.
