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Industrialists propose an industry-focused budget | The Express Stand

Propose reindustrialization measures, call for a halt to deindustrialization

KARACHI:

Eminent industrialists in Karachi have urged the government to implement the proposed fiscal measures for the 2024-2025 federal budget to boost industry-led economic growth in the country. They emphasized the importance of halting industrialization and promoting reindustrialization.

In the budget proposals submitted to key stakeholders including the Prime Minister, Finance Minister, Governor of State Bank of Pakistan (SBP) and Chairman of Federal Board of Revenue (FBR), Muhammad Kamran Arbi, Chairman of the Site Association of Industry (SAI), highlighted that the industrial sector contributes 20% to 22% to GDP and absorbs more than 50% of the national tax burden.

Warning against endangering the vital industrial sector, Arbi stated: “To increase the tax-to-GDP ratio, the government must bring untaxed and undertaxed sectors into the tax net. Overburdening the crucial industrial sector is contrary to Pakistan’s economic development goals.”

SAI’s recommendations cover four policy areas: fiscal, monetary, trade and energy policy. They propose substantial cuts in direct and indirect taxes on industries, corporate taxes, dividends and salaries. The proposals also call for the removal of unnecessary restrictions on the import of industrial inputs, the introduction of a single tiered rate of import tariffs on these inputs, and the elimination of additional and regulatory duties. In addition, they advocate a predictable currency regime with 12-month coverage for imports and exports, revising energy policy to reduce electricity and gas tariffs for industry, and gradually lowering the policy rate to stimulate industrial and economic growth, while the interest on loans for industrial projects is reduced. exports to single digits.

The SAI emphasized that the federal budget must take a strategic direction beyond simply crunching the numbers, emphasizing prudent debt management under the Fiscal Responsibility and Debt Limitation Act of 2005. It must prioritize to allocations for national needs, in particular for reindustrialization, and to enable prudent economic, social and economic needs. and regulatory policymaking, ensure transparency, accountability and responsible public spending, and stimulate economic growth by boosting investment and job creation.

Meanwhile, Iftikhar Ahmed Sheikh, chairman of Karachi Chamber of Commerce and Industry (KCCI), has proposed uniform withholding tax (WHT) rates on imported chickpeas and lentils/pulses at 2% for both commercial and industrial importers.

To address the misuse of tax exemptions and restore fairness in the import sector, the government should end tax exemptions granted to Ex FATA/PATA regions by June 2024. This move will level the playing field and enable effective competition in local markets, he said.

The tax burden should be consistent for all importers/exporters of the same goods/items across the board. Cuts in customs duties are recommended in several sectors, including 20% ​​for the automotive sector, 5% for pharmaceuticals, 0% regulatory duties and 5% customs duties for steel, and 10% customs duties for paper and paper-related products.

Published in The Express Tribune, May 21st2024.

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