ISLAMABAD: The business community Islamabad and Rawalpindi has expressed deep concerns over the government’s proposed money bill to abolish income tax exemptions and impose new taxes, terming it a ‘mini budget’.
According to details, the Islamabad Chamber of Commerce & Industry (ICCI) and Rawalpindi Chamber of Commerce and Industry (RCCI) on Saturday raised concerns over media reports that the government, in order to meet the conditions of the International Monetary Fund (IMF), is preparing to introduce two ordinances to impose taxes of Rs290 billion by abolishing tax exemptions of Rs140 billion given to various sectors of the economy and slapping surcharge of Rs150 billion on power consumers.
Terming it a negative move, they said the mini-budget would further enhance the cost of doing business, give rise to inflation for the common man, badly affect the business growth and damage the confidence of potential investors.
ICCI Acting President Fatma Azim said that the power tariffs in Pakistan are already considered highest in the region, which have caused high production cost and affected the competitiveness of Pakistan’s industrial sector. In these circumstances, imposing a huge burden of Rs150 billion surcharge on power consumers would further enhance the manufacturing cost in Pakistan, lead to great increase in inflation for people and further slowdown the growth of business activities as a result of which, all efforts to revive the economy would be doomed to fail.
Therefore, she urged that instead of levying the power surcharge of Rs150 billion to tackle the circular debt, the government should focus on improving the performance of power companies by controlling their transmission & distribution losses and power theft issues.
She said that the withdrawal of existing tax exemptions of Rs140 billion from various sectors would affect the growth of business activities and damage the confidence of investors. She said that consistency in tax policies is vital for businessmen and potential investors to make investment decisions. However, the frequent changes in tax policies would have a negative impact on both existing and potential investment.
Meanwhile, RCCI President Mohammad Nasir Mirza expressed strong reservations over the proposed bill, saying the country’s economy is going through difficult challenges due to the Covid-19 pandemic and introduction of a money bill at such a time has rung alarm bells among the business community.
He said that actually tax exemptions have led to an increase in investment in many sectors, especially in IT, Real Estate Investment Trust and CPEC Industrial Zones and the government has received many times more tax. Abolishing tax exemptions will stop investment in these sectors in the country as a result of which the Federal Board of Revenue’s (FBR) annual tax targets may not be met, he added. He further said the governments around the world have announced special incentives, tax breaks and financial support packages in the wake of the coronavirus pandemic.
Both the chambers demanded the government that time-bound tax exemptions should be allowed to continue for the existing businesses and urged that the government should announce at least a 5-year tax policy to give a clear future direction to the businessmen and investors that would help them in making decisions for business expansion and investment with more confidence.