THE private sector — a reluctant supporter of the People’s Party government — has made out a case for creating business-friendly environment in the pre-budget proposals, submitted through its various platforms last month.
The federal budget is announced in June followed by provincial budgets.
The common theme that emerges after studying the voluminous proposal documents of multiple trade bodies can be summarised as follows:
* distribute tax burden equitably across all segments including farm income,
* ensure uninterrupted energy supplies to trade and industry,
* bring the cost of credit down by lowering interest rate,
* curb government borrowing from banking system that is crowding out the private sector,
* support export sector by giving it blanket tax exemption,
* make adjustments in Afghan Transit Trade Agreement to curb its misuse,
* improve law and order,
* improve the country’s image, and
* encourage branding.
The unity of thought among different sectors end here as each segment then articulated its own specific interest and make it appear universal.
“The hypocrisy is at its height in a country where everything is demanded and claimed in the greater interest of the people and the country”, lamented an expert setting aside piles of papers containing budget recommendations of business groups.
But a contrary view is that it is the task of the policy makers to sift facts from fiction and address genuine problems and not succumb to rent-seekers.
Dr Waqar Masood, federal secretary finance, said he had yet to study suggestions received by the government that were diverted to Federal Board of Revenue for its comments.
He hoped that the environment for business would improve over the next fiscal year but warned not to expect a dramatic change. “We are in a stabilisation mode that necessitates fiscal adjustments. I, however, hope that the government with the help of productive sectors will be able to come out of the current difficult patch stronger and a growth rate hovering around five per cent may be realised during 2011-12”, he said over telephone from Islamabad.
He told Dawn that the budget exercise had kicked off and the government was in the process of scheduling meetings with interest groups to take them on board while it worked on the next budget. He hinted that a meeting of a select group of a dozen businessmen with President Zardari may be held in Islamabad to assure them of the government’s seriousness to be business friendly.
Gohar Eijaz, Chairman All Pakistan Textile Mills Association, expects a better deal for the industry in the upcoming budget. “We have laboured hard and reached out to the government equipped with proper power point presentations to drive home the point that growth and development are not achievable without addressing problems faced by the industry.
“I have personally appeared before finance committee of the parliament headed earlier by Fauzia Wahab and now by Shehnaz Wazir Ali and briefed the Senate committee. My argument is that the government needs to understand that social cost of squeezing industry dry is prohibitively high and benefits of supporting it are manifolds. The government, therefore, must value and prop up the manufacturing sector,” he added.
Haji Ghulam Ali, president Federation of Pakistan Chamber of Commerce and Industry, was busy in Senate meetings and could not be reached in Islamabad. M Saeed Shafique, President Karachi Chamber of Commerce and Industry (KCCI), was distressed over increasing number of complaints of money extortion from businessmen in the city.
“Let the government provide security of life and property and ensure uninterrupted power supply, the businessmen will take care of the rest. Yes, we favour democracy but what good is it for, if it fails to fulfill its very basic responsibilities and deliver nothing but fear and frustration”, he asked.
Anjum Nisar, the ex-president KCCI said that government needs to look beyond revenue generation.
An expert who served in the government’s economic hierarchy for some time said the issue of fairness of tax regime has occupied the central stage. It would be very hard for the government to persuade retailers to record their dealings or realtors and other service providers to pay taxes till such time, farm income is brought under tax net.
“I do not see the kind of seriousness required to put things right. All government exercises have one focus: to secure easy money from lenders. I hope things will change, but realistically speaking, I do not see that happening in the near future”, he said.
In their written proposals a copy of which was available with Dawn OICCI, a body representing multinational companies operating in Pakistan, insisted on mandatory documentation of all economic activities for effective taxation.
“A significant percentage of the economy remains undocumented and operates outside the tax net. Not only does this act as an impediment towards broadening the tax net, it discourages honest tax payers. Mandatory documentation of all segments of the economy is essential if the government intends to broaden the tax base and reduce burden on already taxed”, OICCI stated in its proposal.
“Further taxing the already overtaxed sectors including OICCI members, manufacturers and the salaried class will only stifle economic activity”.
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