DAILY BUSINESS NEWS SUMMARY IN BRIEF: 06.06.2011.....

Business News

Saturday, June 04, 2011 14:57
-	Defence expenditures should also be accounted for: FM As regards agriculture tax, federal finance minister said that the recovery of agriculture tax was unsatisfactory and we should hope that the provincial government would be making some headway in this regard. He further said that Sindh recovered Rs500 million from agriculture, but it fell down to Rs150 million in 2010.
-	Rs31b burden due to tax-net expansion added
-	4pc budget deficit targeted in FY 11/12 State-owned utilities have defaulted on payments to gas distribution companies, which are then unable to pay for the gas they purchased. (Reuters)
-	Asian shares down ahead of US jobs figures
-	Dollar eases against yen amid US worries
-	Oil up in Asia as dollar weakens
-	RGST, Assets Tax coming in taxation proposals
-	Growth rate stayed positive: Hafeez also present. (PPI)
-	KSE 100-index sheds 184 points, ends at 12,179 The rupee hit a record low of 86.50 last week and dealers said the local unit may face some pressure in days ahead amid increased demand for dollar for import payments and a bleak outlook. (Reuters)
-	Local banks defraud FBR of Rs19 bn in taxes

Trade and industry disappointed

KARACHI: Leaders of trade and industry were disappointed over lack of an incentives package in the budget for attracting investment and promoting industrial and commercial activity.
There was consensus among businessmen gathered at the Federation House  to listen to the budget speech of Finance Minister that the country could have been pulled out of the quagmire had the new budget offered “innovative incentives” for industrialisation and promotion of investment.
These leaders were firm in their opinion that an incentives package was critical for arresting the rising trend of lawlessness and terrorism as it could have led to generation of jobs where unemployed youth could have been absorbed.
Many leaders were reluctant to offer comments before studying the details of the budget documents. However, their initial impression after listening to the Finance Minister Dr Hafeez Shaikh’s budget speech was that it was a ‘status quo’ budget.
They said that the government should have removed 17 per cent Sales Tax on import of plant and machinery imposed on March 16.
“For attracting investment and promoting industrial activity it was necessary that such taxes on import of plant and machinery should have been immediately removed,” commented a corporate leader.
Federation of Pakistan Chambers of Commerce and Industry Vice President Khalid Tawab said the budget 2011-12 lacked incentives for promotion of industry and exports.
Though the government assured that 17 per cent ST would be removed on import of plant and machinery, this demand was also not fulfilled.
Twenty-seven per cent growth in export registered during the current fiscal year to $24 billion was owing to hike in commodity prices, but this could not be expected next year because prices of farm goods have started reeling back, he added.
There was an urgent need, he said to take measures for sustaining growth in exports and that could have been only done by promoting investment and industrial activity.
S M Muneer, former President of FPCCI, said that there are no extraordinary steps in the budget to give impetus to industrial activity at a time when the country is confronted with numerous issues, such as gas and power shortages and bad law and order situation.However, it could only be appreciated that the new budget has not imposed new taxes. On the contrary, tax rates have been reduced and some duties have been eliminated.
Fawad Ejaz Khan, chairman, Pakistan Readymade Garments Manufacturers and Exporters Association (Plgmea), said that by maintaining zero-rated status of all the five export-oriented industries, the government made a remarkable decision.
He said it was also encouraging that the budget 2011-12 had introduced flat rate of sales tax for unregistered persons at five per cent by doing away with four and six per cent previously collected at different stages of products.
Dr Ikhtiar Baig, a businessman and advisor to Prime Minister on Textile, said it is government’s achievement to reduce Sales Tax from 17 per cent to 16 per cent and it would benefit the poor.
He, however, said that the issue of sales tax on import of plant and machinery would be taken up with the government to ensure that it is included in the Finance Bill 2012.
Syed Johar Ali Kandhari, chairman, Korangi Association of Trade and Industry (KATI), said removal of Regularity Duty and Special Excise Duty will go a long way in minimising the number of levies and taxes.
However, he said that the government should have reduced the sales tax rate from 17 per cent to 10 per cent and this could have given a big relief to poor masses across the board.
Javed Chanio, chairman, Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea), said the budget totally lacked focus as it neglected exports and industry which are the most important sectors of economy.
Asad Nisar, vice chairman, SITE Association of Trade and Industry, was highly critical of shifting of income tax commissioner’s powers to lower staff level of inspector and assistant collector.
Saeed Shafique, president, Karachi Chamber of Commerce and Industry (KCCI), said the government had made jugglery of figures and no serious attempt had been made to sort out economic issues in the budget 2011-12.
He further stated that there are many ambiguities in the budget which could not be easily understood without complete budget document, but one could easily say it is more of a political document than budget.

Investors to be given tax holiday for 5-year

ISLAMABAD: Federal Minister for Finance, Dr. Abdul Hafeez Shaikh on Saturday said five-years tax exemptions would be given for those investors who would set up an industrial unit from their own resources.

The Minister stated this while addressing a post-budget press conference here Saturday.

He said the incentive would be provided to those investors who will invest their own capital for building a factory or unit.

The incentive would help to tackle the increasing unemployment in the country besides reducing the recruitment burden on government institutions.

To create more job opportunities and enhancing growth in the country, the government would provide incentives for all other sectors including stock market, financial sector and business community, he added.

It was alarming that only 1.5 million people were depositing their taxes and filling their tax returns out of the 180 million population adding that more areas and people are being identified for revenue generations and reducing foreign dependance, he added.

Mohammed Saleem Mansoori