Lahore Chamber of Commerce and Industry Criticizes Pakistan's Federal Budget

Strategic Insights -

The Lahore Chamber of Commerce and Industry (LCCI) has expressed its reservations about the federal government's latest budget, citing several issues that it believes hinder economic growth and burden businesses. The chamber's leadership, including President Mian Abuzar Shad, criticized the energy minister's performance, highlighting sectoral mismanagement and lack of coordination with stakeholders. They also questioned the decision to import Rs400 billion worth of petrol, which they claim has negatively impacted local refineries. Furthermore, the LCCI expressed concern over the lack of transparency regarding payments to independent power producers (IPPs) and the absence of clear steps to broaden the taxpayer base.

Key Takeaways:

  • The LCCI has welcomed the government's decision to merge or abolish 45 government entities, but stressed the urgent need to privatize all loss-making public sector enterprises.
  • The chamber has highlighted that under-invoicing and Afghan transit trade have cost Pakistan Rs25 trillion over the past 15 years, and that unchecked petroleum imports continue to erode foreign exchange reserves.
  • LCCI President Mian Abuzar Shad has expressed disappointment at the lack of budgetary support for small and medium enterprises (SMEs), the cottage industry, livestock exports, and the IT sector, which exports $3 billion worth of services annually.
  • The LCCI has endorsed the government's move to crack down on unregistered businesses, but called for a higher allocation for water and dam projects.
  • The chamber has also proposed discontinuing the Rs5,000 banknote to aid economic documentation and criticized the lack of clear steps to broaden the taxpayer base.
  • LCCI Senior Vice President Engr Khalid Usman has termed the 6% tax on vehicles with engine capacities between 660cc and 1000cc as a burden on the middle class and noted that energy costs are so high that the country now has surplus gas.
  • The chamber has also criticized the increased discretionary powers granted to the Federal Board of Revenue (FBR), which it says are unwarranted.

Statistics:

  • Rs400 billion worth of petrol imported by the government, which has negatively impacted local refineries.
  • Rs25 trillion lost due to under-invoicing and Afghan transit trade over the past 15 years.
  • $3 billion worth of services exported by the IT sector annually.
  • 45 government entities proposed to be merged or abolished by the government.
  • 6% tax introduced on vehicles with engine capacities between 660cc and 1000cc.
  • 0.5% reduction in the super tax, which LCCI Senior Vice President Engr Khalid Usman terms as negligible.

Sources:

  • The Lahore Chamber of Commerce and Industry (LCCI)
  • Pakistan's Federal Budget 2023
  • The News International
  • Dawn News