LAHORE: The relief package announced by Prime Minister Imran Khan for the construction sector has received a mixed response from industrialists and economic experts.
Announcing the package on Friday, the premier said that all those investing in the construction sector would not be asked about the source of income while withholding tax on all construction material, except for cement and iron, has been waived.
Talking to Pakistan Today, Maple Leaf Cement Factory Limited Chief Executive Officer (CEO) Sayeed Tariq Saigol said that it is heartening to see the prime minister’s package for the construction industry, especially in these difficult times “when we are fighting for lives as well as our economic future”.
He, however, pointed out that the cement sector in Pakistan is taxed higher than in any other sector and this hampers the industry’s growth.
“I hope that in the upcoming budget, the government will look to rationalise the taxes on the industry and bring them at par with global standards,” Saigol said.
Meanwhile, tax consultant and economic expert Dr Ikramul Haq noted that Prime Minister Imran had declared construction sector as an industry and it will be opened after the 14 April (after lockdown) so that daily wagers could get work.
He further noted that the PM had also announced the establishment of the Construction Industrial Board for its promotion.
“For investors in construction, no question will be asked about the source of investment, while fixed income tax on a per yard basis is restored which was withdrawn earlier,” he explained.
Dr Haq stated for those who would invest in Naya Pakistan Housing Scheme, 90pc of fixed tax would be waived, whereas there wold be no capital gain tax on selling a house.
“Punjab and KP have reduced sales tax on services as well as other taxes like Capital Value Tax, stamp duty, registration fee etc. Sindh may also do the same.”
He said that all the industries for construction would also be opened and these actions would help workers.
“The point he missed was to place the condition that beneficiaries will not only give employment to skilled and unskilled labour but also ensure for them health insurance out of extraordinary tax benefits offered,” Dr Haq opined.
He said that the impact of having a vibrant real estate, housing and construction industry would certainly support downstream industries too, especially in terms of creating jobs and its spiral cascading impact.
The tax consultant added that the critics may say that in Pakistan, most wealthy people invest in real estate and construction to park their untaxed money, therefore, they will be the real beneficiaries.
“But the employment they will generate and goods and services they buy will kick-start the economy that is the need of the hour,” the economic expert said.
Many also say in such times their governments, instead of forgoing taxes, tend to invest more infrastructure projects, creating jobs, training people to develop capability and capacity and encourage SME business segments and offer generous incentives for those who can invest in creating jobs. “However, they must realise that the government has no money to invest in any infrastructure projects,” Dr Haq said.
Meanwhile, Pakistan Association of Large Steel Producers (PALSP) Secretary General Syed Wajid Iqbal Bukhari said the steel industry is the backbone of the construction sector, “but the package announced by the PM has zero benefit for the steel sector”.
“If the steel industry shuts down there will be no construction industry,” Bukhari said, adding that the government must address the genuine concerns of the steel industry.
He demanded that the government to reduce interest rate to 5pc and that interest on all banking loans should not be accrued for the period of the lockdown.
“Minimum turnover tax should be reduced to zero per cent for manufacturing entities and their downstream retailers/traders,” Bukhari said.
I applaud Prime Minister Imran Khan for his initiatives to get the economy going. What did courage me is that there are more critics than those who applaud the PM in whatever he does. Pakistanis need to open their mind,heart and soul in these trying times and support their government instead of always criticizing them for what they are trying to do.
You need to put your difference aside and unite as a nation to tackle the bigger problems you are facing on a daily basis.
Today we are all in it together. Rich or Poor no distinctions.
Really amazing words, keep writing because your article help me alot to gain knowledge.
I would assert that the PTI leader lacks a simple majority to implement what Imran Khan wants, therefore I agree that the Presidential system must be introduced to curb nepotism, corruption, red-tapism, and all notified corrupt officials whether retired or in-service to justice and should be awarded due punishments.
Only this way dream of a new Pakistan would be materialized.