KARACHI: The business communities and analysts of brokerage house have given a mixed reaction on the federal budget 2017-18 announced by Ishaq Dar, federal finance minister in the National Assembly here on Friday.
Chairman BMG group and former President Karachi Chamber of Commerce and Industries (KCCI), Siraj Kasim Teli said, “for the first time in its tenure the government of Nawaz Sharif presented a balanced budget for 2017-18 as it has curtailed some discriminatory power of the Federal Board of Revenue (FBR) to raid the companies and seized their accounts etc.”
It was a long-standing demand of all chambers of the country to curtail the discriminatory power of FBR to raid and seized accounts of companies working under the umbrella of registered chambers and those who are paying taxes. Now the government has accepted the demand of all chambers, he added.
Such decision has been taken by Ishaq Dar on the last budget of his tenure as he knew that if he did not accept it, the businessmen would reject Nawaz Sharif government in the coming election. Businessmen were facing a lot of trouble because of this illegal FBR’s powers.
“Overall budget presented by the government is little better compared to last four budgets,” Teli said. He further added that the government may achieve its 6 per cent GDP target set for the next fiscal year because of the investment coming through China-Pakistan Economic Corridor (CPEC).
The finance ministry has presented 2017-18 budget of Rs 4.75 trillion, which is up around Rs 500 billion from the last year, which means the government has decided to increase the taxes on several routine consumer goods, Siraj Kasim Teli said. Ishaq Dar in his speech claimed that he suggested the government increase taxes on 565 consumer products.
He said the government gave some incentives to poultry business, import of poultry products including chick, registration of new cars for filers, agriculture and its products, but on the other side, it increased withholding tax on cement from Rs 1 per kilogramme to Rs 1.25 per kilogramme.
Zubair Motiwala, a textile industrialist and former KCCI president, said the government presented a balance budget for 2017-18 as it seems till now that general population would not be affected by it. The major incentives have been given to agriculture industry, poultry businessmen.
He said Ishaq Dar did not talk about the declining exports and the textile industry and its refunds etc during his speech. We have to read the financial bill to understand this budget. Increased WHT on cement will affect all the construction industry of the country and its exports, he added.
Former KCCI president Haroon Farooqui declared the budget 2017-18 only for the documented industry as it maintained all previous taxes on non-fillers. In protest, KCCI and other chambers of the country did not submit their suggestions to the ministry of finance this year as the government had rejected their all previous suggestions but now it accepted only one demand to restraint the FBR.
HM Shahzad said the government did not give any new incentive to the importers of used vehicles despite their demand to allow import of used vehicles up to five years. The government maintained it on three-year-old cars but it reduces the registration fee up to 25 per cent for filers.
He further claimed that the auto assemblers were demanding from the government to further reduce the period from 3-years to 2-years for imported used cars.
On the other side, the brokerage houses were not happy as the government has increased taxes on dividends to 15 per cent from 12.5 per cent, which may give negative impact on the stock market.
Topline brokerage house said Capital Gain Tax (CGT) increased to 15 per cent on stock purchased since July 1, 2013. Previously CGT rate varied between 7.5-15 per cent depending on holding period.
The government has reduced the corporate tax rate from 31 per cent to 30 per cent, as the government promised to bring it to 30 per cent in five year time.
Continuation of Super Tax (companies earning more than Rs 500 million to pay an additional corporate tax of 3 per cent while banks 4 per cent) will give negative impact on the country’s businesses. The minimum turnover Tax increased to 1.25 per cent which is also negative, it added.
