With a view to help grow the businesses in post-corona economic strategy, the government will have to take solid measures in the upcoming Federal Budget 2021-22 to strengthen the industry, especially the SMEs, saving the livelihood of millions of workers associated with the small industries. The government will have to make a visible reduction in taxes in the budget to help grow the businesses, particularly the SME sector, as Pakistan needs millions of jobs annually.
These recommendations were put forward by APBF president Syed Maaz Mahmood, in a joint meeting of various trade and industrial sectors held here to review the Budget proposals for the upcoming fiscal year of 2021-22, urging the finance ministry to make focus on greater relief to the documented and registered SMEs.
Unveiling the budget proposals, APBF President said that the Forum has submitted comprehensive proposals for the upcoming federal budget with main objective to bring liberal investment policy, infrastructure development, broadening of tax base and creating jobs through industrialization. The budget proposals were compiled in an unbiased and transparent manner, incorporating feedback received from business community on hosts of sectors from all over the country.
Syed Maaz Mahmood proposed the budget makers to reduce tax rates with a view to widen the tax base and curtail parallel economy, also providing a competitive edge to Pakistan’s products in global markets.
APBF Chairman Ibrahim Qureshi said that the SMEs are the major victims of corona pandemic; therefore, the government should introduce supportive policies. He said that the small and medium enterprises are backbone of the economy and their role was crucial for economic development. He said that major issue of the SMEs is limited access to the financing, as just 5-7% of the total lending to the private sector was being given to them while the number of SME borrowers are below 0.2 million, which should be increased.
APBF President Syed Maaz Mahmood called for introducing soft policies for SMEs including special financing schemes where they can get credit at low markup rates with no collateral requirement.
Moreover, there should be a holiday for all taxes and levies for five years for the newly registered companies, especially SMEs. There should also be exemption from audit for the newly registered SMEs in this period.
He said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should announce special incentives for a cash-strapped Small and Medium Industry, which represents more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.
Expressing dissatisfaction over the financial packages announced so far by the government for the industry to deal with the challenges posed by a coronavirus, the APBF President called for a significant cut in import duties and waiver of sales tax, income tax and additional income taxes in post-corona economic strategy.
Syed Maaz Mahmood said that mere statements will not work unless the government takes solid measures. A sizable reduction in fuel prices, a major cut in the key policy rate, regionally competitive energy rates, quick refunds payment, and relaxation in duties & taxes are need of the hour.
He added that promoting foreign direct investment, increasing the share of direct taxes and slashing the slab of indirect levies topped the proposals presented by the All Pakistan Business Forum for the federal budget 2021-22. He said that the APBF, in its budget proposals, also urged the government to reduce sales tax to single digit and also cut corporate tax to make the upcoming budget business-friendly.