Pakistan Business Forum Submits Budget Proposals to Reduce Costs and Boost Growth

Pakistan Business Forum submits budget proposals to relevant ministries, aiming to reduce business costs, strengthen agriculture, and promote export-led growth. Proposals include tax reforms, mechanization, and improved market access to stimulate economic growth and revenue generation.

Nitish Verma
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Pakistan Business Forum Submits Budget Proposals to Reduce Costs and Boost Growth

Pakistan Business Forum Submits Budget Proposals to Reduce Costs and Boost Growth

The Pakistan Business Forum (PBF) has submitted a comprehensive set of budget proposals to the relevant Ministries of Finance, National Food Security, Commerce, and Industries for the fiscal year 2024-25. The proposals aim to reduce the cost of doing business, strengthen the agriculture sector, and promote export-led growth in Pakistan.

Why this matters: The implementation of these proposals has the potential to stimulate economic growth and increase revenue generation in Pakistan, which is crucial for addressing the country's fiscal challenges and improving the standard of living for its citizens. Effective tax reforms and export-led growth strategies can also serve as a model for other developing economies facing similar challenges.

One of the key objectives of the PBF's proposals is to address the issue of under-invoicing by commercial importers, which has been detrimental to domestic industries. The forum calls for strict measures to curb this practice and ensure a level playing field for local businesses. Additionally, the PBF suggests reforms to the super tax regime, which was imposed on the documented sector retrospectively through the Finance Act 2022, to reduce the burden on businesses.

To boost the agriculture sector, the PBF emphasizes the importance of mechanization and technology adoption. Khawaja Mehboob ur Rehman, President of the PBF, stresses, "Mechanization and technology adoption to enhance productivity and efficiency, and in this regard, solid incentives may be placed in the federal budget." The forum also recommends improving irrigation systems, water management practices, and access to high-quality seeds and fertilizers to increase crop yields and productivity.

In terms of promoting export-led growth, the PBF proposes improving market access and trade agreements to increase agri-exports and enhance the competitiveness of Pakistani agricultural products. The forum also suggests introducing tax holidays for the setup of machinery, such as Control Atmosphere (CA) stores, to encourage value addition and increase the share of horticulture and agricultural exports.

The PBF's tax reform proposals include simplifying the tax system, rationalizing tax rates, eliminating distorting tax exemptions, and automating tax processes to reduce human interaction and minimize the risk of corruption. The forum also recommends abolishing withholding taxes to ease the burden on businesses and individuals. Additionally, the PBF suggests reducing tariffs on raw materials and machinery to 0.5% to encourage industrial growth and exports.

To document the economy, the PBF proposes amending the Custom Act 1969 to allow local manufacturers and address the misuse of the Afghan Transit Trade (ATT) and smuggling from Iran. The forum also suggests applying quantitative restrictions on goods moving under ATT on the basis of consumption.

The PBF's budget proposals come at a critical time for Pakistan's economy, as the country faces significant revenue shortfalls and fiscal challenges. The current tax collection target of Rs9 trillion is significantly lower than the estimated potential of Rs24 trillion. The World Bank and the International Monetary Fund have endorsed the need for tax system reform to alleviate Pakistan's fiscal burdens. The implementation of these recommendations will be closely monitored by stakeholders to realize their full potential in driving economic development and prosperity in Pakistan.

Key Takeaways

  • Pakistan Business Forum submits budget proposals to relevant ministries for FY 2024-25.
  • Proposals aim to reduce business costs, strengthen agriculture, and promote export-led growth.
  • PBF suggests reforms to curb under-invoicing, super tax regime, and tax system simplification.
  • Proposals also focus on mechanization, technology adoption, and improving irrigation systems in agriculture.
  • Implementation of proposals can stimulate economic growth, increase revenue, and address fiscal challenges.