Provincial Minister for Finance Makhdoom Hashim Jawan Bakht has said that consultation with stakeholders for budget preparation is top priority as economic revival is not possible without their due participation.
He was speaking at the Lahore Chamber of commerce & Industry. LCCI President Irfan iqbal Sheikh, Senior Vice President Ali Hussam Asghar, Vice President Mian Zahid Jawaid Ahmad, Chairman Punjab Revenue Authority (PRA) Zain-ul-Abiden Sahi, Chairman Punjab Board of Investment & Trade (PBIT) Jahanzeb Burana and Secretary Finance Muhammad Abdullah Sumbal also spoke on the occasion.
The minister said that major part of Annual Development Plan (ADP) was being spent to those projects that would promote trade and economic activities. He said that an internal study has identified more than fifty taxes abolishment of which will not harm exchequer or Ease of Doing Business index. National Tax Council has been asked to play its role for tax harmonization.
“We want to enhance tax-to-GDP ratio but not at the cost of economy”, the Minister said and added that inspector less regime and digitalization would improve the EODB ranking. He said that work on E-payments system is well on the way and soon this system would be implemented.
He said that revival of construction sector was a must. He said that 16 per cent tax was imposed on this sector last year that has been withdrawn and a flat rate has been imposed. “We are looking to property tax, DC rates, Stamp duty & FBR rates and good news will be given soon”, Provincial Finance Minister added.
LCCI President Irfan Iqbal Sheikh drew the attention of Finance Minister to the unexpected slash in the Annual Development Program (ADP) expenditure over the time from Rs.576 Billion in 2017-18 to Rs.350 Billion in Budget 2019-20. He said that it has negatively impacted the ongoing infrastructure projects and other development activities in the province and has also resulted in an economic slowdown.
He said that there should be a considerable increase in the size of Annual Development Program for the year 2020-21 to stimulate economic activity in the province.
The LCCI president said that Sales Tax on services was being charged at different rates by Punjab Revenue Authority (16%) and Sindh Revenue Board (13%) which creates an environment of competition among the provinces. Uniform rate of Sales Tax on services should be charged by all the provinces.
He said that Punjab holds paramount importance in Pakistan’s Ease of Doing Business as Lahore holds 35% weightage in the calculation of overall ranking. There is a tremendous potential of improvement in the ‘Paying Taxes’ ranking as Pakistan stands at 161st position in this indicator.
Irfan Iqbal Sheikh said that LCCI has been advocating for a need to reduce the number of taxes and the frequency of the tax payments. We appreciate the facility of online tax payments, however, we demand that these payments should also be allowed to make through Credit card and Debit card.
“There is also a need for the reduction in number of Provincial Tax payments which are more than 120 according to the Annual Budget statement of Government of Punjab. Many of these taxes have small collection amounts i.e. less than Rs 1 million and can easily be abolished or clubbed into other taxes”, the LCCI President added.
He said that some steps must be taken to separate tax collection from service provision, so that departments like PESSI etc. stop sending inspectors for tax collection and better focus only on delivery of services like hospitalization, pensions, injury/death grants etc.
The LCCI President said that there is another important issue which requires your immediate attention. The WASA charges of Rs.100,000/month for 1 Cusec for Industrial, Commercial, Non Residential and Corporate Bodies extracting water through tube wells is on a higher side. Keeping in view the high cost of doing business, these charges should be rationalized.
He said that to give boost to the pace of industrialization, there should be “Tax Holiday” announced for all Provincial taxes and levies for at least 3 years for the newly registered companies, especially for SMEs.
Irfan Iqbal Sheikh said that Punjab infrastructure Development Cess puts an additional tax burden on the businesses in Punjab who use the relatively expensive Bonded Carriers to transport their goods from ports in Karachi and get them cleared at Dry Ports in Punjab. To avoid this Cess, many businesses in Punjab prefer to get their consignments cleared from Karachi. This also hampers the businesses of clearing agents and transportation companies that provide sizeable employment. We therefore recommend that this CESS should be abolished in the larger interest of the business community.
LCCI President also presented road map for exports boost to the Provincial Minister.
LCCI EC Members Zeshan Sohail Malik, Dr. Riaz Ahmad, Haji Asif Sehar, Fiaz Haider, Usman Khalid, Shafiq Butt, Atif Ikram, Haris Attiq, Arshad Khan, Aqib Asif, Yasir Khursheed, former Senior Vice President Amjad Ali Jawa and former Vice President Kashif Anwar were also present.
