The business community on Thursday lashed out at the PML-N government for announcing “cosmetic” measures with regard to the imposition of agriculture tax. The new government, despite wining a heavy mandate in May 11 election, had bowed down to powerful lobbies of feudalists and landlords in parliament who always hindered the taxing of agriculture income.
The business community took a U-turn on Thursday from their Wednesday’s all-praise stance towards the “face value” of the Federal Budget 2013-2014 that the traders and industrialists termed as pro-feudal, pro-landlords and pro-bureaucrats.
“Lobbies in the Parliament, that of the feudalists and the landlords, are the actual stumbling block,” FPCCI President Zubair Ahmed Malik told a briefing at Federation House. Alleging that the finance minister had “cosmetically” addressed the issue of broadening of the tax net, particularly to the agriculture sector in his Wednesday’s budget speech, Malik said agriculture sector constituted 20 percent of the GDP but was contributing less than one percent to the national kitty. “This is not on,” he said. The FPCCI chief wondered as to what prevented the government from taxing the farm income while it was enjoying 75 percent of the
governmental power in center and provinces like Punjab and Balochistan.
Also, Malik accused the federal finance minister of having fudged numbers on the fiscal deficit.
“The days of fudging are over,” Malik said, adding that Dar had juggled with numbers while setting the fiscal deficit target at 6.3 percent in his budget speech. Citing news reports, Malik claimed fiscal gap during FY13 would set at 7.5 percent and not 8.8 percent quoted by Dar. The one percent fudged difference would be claimed by the government as a decrease at the end of FY14, he claimed. Commenting on overall budget, the FPCCI chief said despite all the positives it has the new fiscal plan had failed to relieve the common man, particularly salaried class. Flanked by Tariq Saeed, Azhar Saeed Butt, Zakaria Usman, Iftikhar A Malik, Mian Zahid Hussain, Atiq Mir, Gulzar Feroz and other leading businessmen, the FPCCI president said the budget had fallen short of his expectations. “It lacks direction they should have given to us,” he claimed demanding that the finance minister sit across the table to negotiate necessary amendments in the proposed fiscal document.
Characterizing the budget proposals into positive and negative, Malik categorized as positive the cutting of fiscal deficit to 6.3 percent, slashing corporate tax to 30 percent, retiring over Rs 500 billion circular debt in 60 days, Rs 1.5 trillion PSDP, targeting GDP growth at 4.4 percent, retaining inflation in a single digit (7.5 percent currently) and the privatization of state-owned enterprises. “I hope all these steps be materialized in letter and spirit,” Malik said.
About negatives, the FPCCI president was critical of the one percent raise in GST that he said was unacceptable. “It would directly affect 180 million people and would restrain the government from retaining inflation in a single digit,” Malik said.
Mian Zahid Hussain, head of FPCCI’s sales tax committee, said inflationary impact of the increase would be far greater on packed daily-use essentials when retailer, distributor and retailer would add to their profit.
Other budgetary negatives Malik highlighted included: lack of incentives like reduction in mark up rate for industries, absence of a comprehensive energy development plan, the unlawful issuance of SROs by the FBR without consent of the Parliament, no mention of SMEs sector in budget speech, cumbersome procedures of sales tax refund, Rs 31 billion allocation for railways where Rs 34 billion salaries are paid and inflationary pressure of two percent additional tax in the name of documentation of the economy. “This budget would further widen the gap between the rich and poor,” said Malik. FPCCI official Zakaria Usman said: “A budget prepared with revenue’s point of view can never deliver.” Terming it as “bureaucratic budget”, the trader said the government never was ready to tax the agriculturists.
taxes are levied on net income and agriculture has never been a profitable business in Pakistan. Truly speaking agriculture has not yet gained a status of business. Since creation of Pakistan all the efforts have been put to boost industry and services never for agriculture sector. Agriculture is just used to put a historical lines written on each economic review of Pakistan : "Pakistan is an agriculture country etcc…." If someone dares to calculate the cost benifit analysis of farmers then they would be surprised to know that agriculture needs grants and subsidies not taxes. All the businessmen and industrialist combined together to promote Pakistan through industries but fact is that without developing agriculture no industry could be promoted.
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