Anomalies still exist in budget: KCCI

KARACHI: The Karachi Chamber of Commerce & Industry (KCCI) has observed that though many of the proposals recommended by it were accepted, still there were anomalies in the Federal Budget for 2011-12.

The office bearers of KCCI including President Saeed Shafique and former presidents jointly addressed the post-budget press conference at the Chamber here on Monday.

The budget proposals of the chamber which were accepted by the federal government included abolition of regulatory duty on 342 items, removal of special excise duty of 2.5 percent, removal of Federal Excise Duty (FED) from 15 items and later its complete removal in next 2 years.

Moreover, the GST rate was reduced to 16 percent from 17 percent; duty on pharmaceutical raw materials was brought down to 5 percent; increase in wealth statement limit from Rs0.5 million to Rs0.1 million; basic exemption limit increased from Rs0.3 million to Rs3.5 million.

Tax incentives have been given to promote investment, removal of exemption of agricultural and defense items and reduction in tax rates on cash withdrawal were made on Chamber's recommendations, the KCCI office bearers admitted.

Speaking on the occasion, chamber president Saeed Shafique said that budgetary targets for next fiscal 2011-12 were too ambitious and beyond ground realities.

Referring to budget announced on June 3, he said that the external receipts of Rs414 billion were up by 43 percent from the revised estimates of the current year.

The Stand by Arrangement of dollars 3.2 billion with the IMF has not yet been finalised and it would not be possible to meet the budgetary programme loans of Rs180 billion with the support of the Fund.

He also criticised the revenue collection target of Rs837 billion for next fiscal, up by 28 percent compared to the current fiscal and added that FBR never met its targets.

Referring to the financing of the budget deficit, Shafique feared that it would be near to impossible to meet the target through the proposed route.

In addition, inter-bank or government borrowing will further reduce GDP growth by reducing credit availability to private businesses.

About the energy sector, the KCCI president said that one of the major contributors to the continuing energy crisis was the failure of power generation companies to operate at capacity with inter-circular debt rising despite periodic issuance of TFCs.

He said that despite recommendations no efforts were made to change the policy for Afghan Transit Trade (ATT) which was expected to cause loss of Rs20 to 40 billion to the exchequer.

Similarly, he said no amount has been allocated as subsidy on Research & Development support to textile sector.

The KCCI president also dwelt at length on various issues pertaining to trade and industry which, he said, would hamper economic growth.

Copyright APP (Associated Press of Pakistan), 2011