Financial analysts have offered mixed reactions to the FY 2020-21 budget, with most expressing disappointment and a lack of enthusiasm, calling it ambitious and “directionless”, while others going so far as to say it can be viewed as “business friendly”.
Speaking to a private TV channel right after Minister for Industries and Production Hammad Azhar’s budget presentation, financial analyst Khurram Shehzad said that the budget did not entail anything extra-ordinary, although tax relief on custom and import duties has been given and the hard-hit hotel industry also got respite in terms of taxes.
Shehzad lamented that despite no new taxes, the GDP rate will be difficult to maintain with 2% deficit and 6.5% inflation rate, adding that due to these factors the FBR will have a hard time achieving its target which is 24% of the total tax collection. He welcomed the government’s move to not raise the rate of pension and salaries this year, explaining that the government in previous years has been making an increase in these un-funded pensions with no sources to generate revenue for them.
Another analyst, businessman Mian Zahid Hussain said that this is a status-quo budget which happens to appear quite “directionnless”. “Our post-covid-19 economy will require a jump start and I found no such recommendations in the budget.,” he told a private TV channel. “We had proposed zero rating (VAT exemption) for some goods and we saw no mention of that. Nothing for SMEs and nothing of note for governance. However, we see many measures for revenue,” he noted.
Hussain said it seems there is no good news as such for the business community and “I am sure is some bad news”. “The audit measures they have adopted and for third party information and revisions in appeals and the sales tax revisions and other revisions do not make it seem like there is anything good in particular contained for the business community,” said the businessman.
Abdul Qadir Memon, an expert on tax issues, said that the outlay of the budget is more than the allocation this time, adding that the targets also seem quite ‘unattainable’. He did acknowledge that many relaxations have been given this year in terms of property income and withholding taxation.
Industrialist Siraj Kassim Teli said that the government mentioned the coronavirus mentioned several times in the budget, however, it failed to frame any policies in wake of the situation. Teli said the main focus seemed to be the construction sector and cement and tourism industries in terms of relief. “These are Khan sahab’s favourite sectors, rest of all the local industries are suffering. This is a disappointing budget for the business community,” he said.
All Pakistan Anjuman-e-Tajran (APAT) Secretary-General Naeem Mir rejected the 2020-21 budget, saying small businesses were ignored and that the condition of presenting a copy of CNIC for transactions was encouraging the undocumented economy. “The CNIC condition should have been revoked amid the coronavirus” crisis, Mir said, noting that no easy loan scheme for small business owners was launched. Small businesses provide employment to about 40% of the workforce, he added. “Poor government policies have shrunk the Rs51 billion economy,” the top APAT official said, adding that the incumbent regime was “hiding” behind the coronavirus pandemic. “If no new tax is imposed, how will the budget deficit be brought from 7% to 4.4%,” he wondered, stressing that the government could not let itself off the hook by playing a game of filers and non-filers.
Another member of the business community, Mohammad Sohail, spoke to a private TV channel, calling the budget “impractical”. He said that the most important factors that concern the common man are employment and income, which are under threat due to the current pandemic. “The budget seems quite incomplete and uncertain.”
On the flip side, Islamabad Chamber of Commerce and Industry (ICCI) President Muhammad Ahmed said he welcomes the budget, terming it “business friendly”.
Ahmed noted that the customs and regulatory duties were reduced and relief provided to the industries, which brought down the inflation rate. “The government presented a business-friendly budget,” he added. The ICCI president also welcomed the move of relaxing the condition of presenting CNIC copies for transactions – now at Rs100,000. “Now new taxes were introduced and that is great,” he said.
