KARACHI: Prime Minister Imran Khan’s meeting with the business community in Karachi remained inconclusive on Wednesday, as he declined to accept any of their three major demands, while a section of the traders’ community gave a strike call for Saturday (July 13). tax
Imran paid a daylong visit to the of port city in a bid to allay concerns of the business community about the budget for fiscal year 2019-20.
He was accompanied by his economic team, including Adviser on Finance Hafeez Shaikh and State Bank of Pakistan (SBP) Governor Reza Baqir.
Sindh Governor Imran Ismail was also present during the meeting at the Governor’s House.
The business community urged the prime minister to withdraw the condition of acquiring a photocopy of the computerised national identity card (CNIC) of buyers of factory products, 17% value-added tax and to restore the old system of zero tax rate facility for five textile export sectors.
“We will not reverse the measures implemented through the budget,” a businessman, who was present in the meeting, quoted Shaikh as saying.
“Sales are not allowed without a copy of the CNIC. We have implemented the new system after thorough deliberations,” Shaikh added.
Later during the day, the prime minister told a news conference that he had asked the business community to pay due taxes, which is a must to take the country out of the financial crisis and paying off foreign debt worth Rs30 trillion.
He repeated his stance that foreign debt had accumulated due to rampant corruption and money laundering during the past two governments of former prime minister Nawaz Sharif and former president Asif Ali Zardari.
“We aim at passing on as little pain to businesses as possible,” the prime minister told the news conference.
“I have met business community and promised them that the government is your partner,” he added.
“Our job is to help you (businessmen). The growth in businesses would create the much-needed job opportunities. Investment will come in so that we could pay off the foreign debt,” he added.
He said there are businessmen who do not want to become part of the taxpayers net.
“I have only one message for all of them: that if all of us would not pay taxes, nothing would change and the burden on the section of society paying taxes would increase,” he said.
Industry has 20% share in gross domestic product (GDP), but its contribution in taxes stands at 70% which is unsustainable for the industry.
It has started deteriorating due to such high taxes. “Everyone has to pay due taxes to fix the whole economy,” he said.
“Businesses will grow, Pakistan will grow…if everyone would pay due taxes,” he said.
The prime minister said Federal Board of Revenue (FBR) Chairman Shabbar Zaidi and he were confident of meeting the target of Rs5.55 trillion taxes for the current fiscal year, starting July 1, 2019.
“The tax collection target of Rs5.55 trillion is nothing if everyone pays due small taxes,” Imran said.
“Pakistan has potential to collect at least Rs8 trillion in taxes. We aim at passing on as little pain to businesses as possible,” he said.
“Business community has assured full cooperation. Their cooperation is required to get rid of the foreign debt. Some of the traders are scared that paying of the due taxes would increase their difficulties.
“I assure them that they will not be in problem. Paying the due taxes would help them come out of difficult economic situation,” he said.
He said the government is making efforts in all directions to increase its income and cut expenditure to fix the faltering economy. “The federal government has cut its expenditures by Rs40 billion during these inflationary days. The Pakistan Army has cut its expenditures for the first time in history. Cabinet ministers have cut their salaries by 10% each,” he said.
The government, he said, has taken measures to increase exports and narrow down trade and current account deficits. Exports have increased in volumetric terms, if not in value terms. “Garment exports have increased by 30%,” he said.
The government has also taken measures to increase remittance inflows through legal channels. “They have also increased (10% in FY19). We have managed to cut the current account deficit by half to $1 billion a month compared to $2 billion a month in the preceding year,” the PM added.
The premier said the government is trying to attract foreign direct investment. For the purpose, it has signed memorandums of understanding (MoUs). Negotiations are under way with various countries including Qatar, Saudi Arabia, UAE and China.
“God has gifted us everything in the country which also has outstanding strategic location on the world map. China, the world’s single largest growing economy, is one of our neighbours. The energy producing countries are on the other hand. We have Gwadar which the entire Central Asian countries want to use for trade. So when we fix the problems and bring reforms, the new foreign investment would come in.”
Traders give strike call
A section of traders led by All Karachi Tajir Ittehad Chairman Atiq Mir has given a shutter-down strike call for Saturday (July 13) after PM Imran Khan avoided meeting with the Karachi-based traders community and spent his one-day visit with big businessmen representing Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Karachi Chamber of Commerce and Industry (KCCI), Pakistan Stock Exchange (PSX) and bankers.
Earlier, the FBR Chairman Zaidi met traders at Sindh Governor House, but refused to accept any of the three major demands. Several trade associations, including the All Karachi Tajir Ittehad Committee led by Muhammad Rizwan, have summoned emergency meetings of their trade bodies on Thursday and Friday to consider joining the Saturday strike call nationwide. tax
“We have called a meeting tomorrow (Thursday) to decide joining the Saturday shutters-down strike,” Rizwan said after their negotiations failed with the government.
Stock market fund in 4-5 days
A seasoned businessmen Arif Habib quoted Hafeez Shaikh as saying at the meeting that the stock market support fund worth Rs20 billion would be launched over the next four to five days.
Launch of the fund approved by Economic Coordination Committee (ECC) of the Cabinet on May 31, 2019 has been delayed due to the government engagement with international partners to fix the economy, Shaikh told the meeting.
Habib said they have asked the PM and his economic team to avoid a further increase in key interest rate in the forthcoming monetary policy statement due in the current month of July, as inflation has remained under control. Speculation for consideration for a further increase in the interest rate has scared the stock market.
(This news/article originally appeared in The Express Tribune on July 11th, 2019)