KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Agha Shahab Ahmed Khan, while emphasizing the need to consider out of the box solutions, urged the government to formulate an across-the-board incentive package encompassing all the sectors of trade and industry in order to stimulate the economy so as to minimize the impact of global recession and prevent massive unemployment in Pakistan.
In a letter sent to Prime Minister Imran Khan, Agha Shahab gave numerous recommendations for the proposed across-the-board incentive package in which General Sales Tax (GST) rates should be reduced from 17 percent to 9 percent while Withholding Tax (WHT) on all supplies by manufacturers and traders must also be brought down from the current 4.5 percent to 2 percent and the anomaly in WHT rates on import of raw materials by industry and commercial importers has to be removed and a uniform rate of With-Holding Tax should be applicable on both to support the Small & Medium Enterprises (SMEs).
He said that most importantly the discretionary powers under Section 140 of Income Tax Ordinance to access the bank accounts of registered persons be withdrawn, in order to restore confidence of investors and encourage transactions through banking system.
He recommended that the policy rate has to be reduced to 7 percent in line with other countries to stimulate the economy whereas the deferred import bills which are due for payment through banks should be refinanced at 5 percent mark-up.
President KCCI also recommended no questions should be asked for all investments in capital goods, raw materials, premises, acquisition of land and building for industry and trade up to 30th June 2022.
He noted that many other countries have taken initiatives to support their economies and announced incentive packages worth trillions of dollars to bail out the businesses which are going to suffer due to o recession triggered by COVID-19 pandemic. “Even the Bangladeshi government has announced an across the board relief package of $8.6 billion which includes significant support to SMEs.”
He pointed out that the black economy in Pakistan is twice the size of documented economy and due to the present coercive tax regime and laws, a very large amount of capital is blocked in idle investments. In view of the prevailing global economic crisis and its negative impact on Pakistan, it is essential to release the blocked capital and encourage investments into productive economic activities such as industry and trade.
Appreciating the Special Incentive Package for Construction Industry, President KCCI, however, said that the benefits of concessions granted to one or two specific sectors will neither reach the majority of trade and industry nor provide relief to common man. In the present extra-ordinary circumstances, it is necessary to provide across the board incentive package for investment in all sectors of trade and industry, and the SMEs which have a major contribution to GDP and Tax revenues, he added.
It is a critical and challenging time for the country and its economy, therefore the government has to remove the bureaucratic shackles and handicaps created by a very complex tax system, to unleash the entrepreneurial capacity of business community.