Daily Times

Majyd Aziz, President EFP, while introducing Federal Budget Proposals 2019-2020 stated, “The Economic Council of the Employers’ Federation of Pakistan in its first ever endeavor initiated pragmatic, doable, and workable solutions to the various economic and financial issues impeding the economic growth and prosperity of Pakistan. The proposals have been formulated after intensive deliberations and discussions with stakeholders and consultations with legal and economic advisors. EFP is certain that the economic policymakers of the government would accord positive consideration to these proposals”.

Ismail Suttar, Chairman EFP-EC, and Zakaria Usman, Chairman Budget Advisory Committee, highlighted the salient features of the proposals. They stated that a comprehensive exercise was attempted to bring into focus the solutions to the economic challenges and difficulties that have been experienced by Pakistan. They added that, the emphasis was given on broadening of the tax base, reducing the cost of doing business, solving the circular debt crisis, and reforming the existing tax regime. Elaborating further, Ismail Suttar and Zakaria Usman proposed the agreed upon solutions:

1. Measures for Broadening the Tax Base: A single-digit sales tax be imposed on the non-traditional inputs and government should coordinate with provincial revenue authorities to recover lost revenue. Moreover, in the retail sector, a sales tax of upto 7.5 percent on electricity bills of unregistered retailers be imposed along with issuance of ‘Common Tax Identifier’ cards to promote tax filing. Lastly, a formula for determination of true market value of real estates is forthwith devised and proceeds from loss-making public enterprises to be used to revive sick units.

2. Simplification of Tax Procedures: All deferred refunds of export-led industries be cleared without any pre-auditing. It is also imperative to establish a one-tax authority at federal level and segregate the tax machinery from judicial influence to maintain impartiality. Finally, commercial exporters should be excluded from further sales tax, including withholding tax on locally manufactured vehicles.

3. Reducing the Cost of Doing Business: To suppress the existing liquidity crunch faced by exporters, DTRE should be fast-tracked and all sectors with exempted output be declared zero-rated. Moreover, we demand turnover be reduced to 1 percent, manufacturing companies be permitted to claim input sales tax on office materials and installed plants and machineries be allowed to carry-forward tax credits up to 10 year. Similarly, in order to promote culture of import-substitution, regulatory duties on foreign-made inputs be gradually curtailed

4. Resolving the Circular Debt Crisis: To tame the circular debt beast, we propose commoditizing electricity in the form of futures and hence, creating a wholesale electricity market in Pakistan.

5. Industry Specific Recommendations: In this segment, woes of major industries such as Textile, Steel and Automobile along with their solutions are highlighted.