LAHORE: The Punjab government has proposed brining the mark-up rate to single digit through a monetary policy announcement which should be made within next 72 hours besides launching a Rs 100 billion new capital investment scheme for supply chain.
The proposal was made by the Punjab government through Punjab Economic Stabilization Package to counter the expected economic loss, unemployment and health issues faced by the province due to the ongoing coronavirus pandemic.
According to the proposed plan, the Punjab government has suggested to the federal government to impose a moratorium for three months on the markup and repayments for the export financing (EFF) to the private sector. Alongside, 100 per cent LC margin requirement should be suspended immediately.
The Punjab government has suggested that all refunds related to sales tax and income tax of all businesses should be paid within next 72 hours.
Additionally, the Point of Sale (POS) initiative launched by the federal government through Federal Board of Revenue (FBR) at retail sector mainly at shopping malls, markets and shops should be postponed till the next fiscal year i.e. 1st July, 2020. Further, the sales tax on all consumer goods should be suspended immediately till the next fiscal year.
All exports have been moved to zero rated for sales tax till 1st July, 2020. To promote investment in the health product manufacturing, the federal government should exempt local health product manufacturers from income and sales tax.
To encourage charities, the tax credit to the charities should be increased to 30 per cent so the corporate sector is motivated to increase registered charities and support the government to cope with the coronavirus situation in the country.
Further, on the utilities side, the Punjab government proposed that the federal government should pass on the declining fuel prices’ full impact to consumers. Besides, the NEPRA should provide a negative fuel adjustment in utilities bills. Commercial electricity bills for the month of March may be paid in a 4-month period and the electricity users of up to 300KW for next 3 months may be paid over 12 months. Goods flow from land-locked provinces must be sustained.
It was pointed out that Punjab is expecting a 3 to 9 per cent loss in its provincial GDP due to coronavirus while unemployment will be on the rise as almost 3-4 million immediate job loss is expected with Rs 600-1800 billion economic activity loss.
In long-term, the province is estimating another loss of more than 700,000 jobs due to coronavirus pandemic.
The steps taken by the Punjab government on economic fronts are including moratorium on all provincial duties, taxes, cesses up to 1st July, 2020. The province has established a Chief Minister’s Collaborative Fund of Rs 5 billion for corona control.
Further, a Rs 12 billion health package has already been released against the federal government’s estimate of Rs 18 billion for first three months.
Additionally, Rs 40 billion social protection package is designed for the first three months, unemployed worker registration and support centers are going to open besides Rs 5 billion SME cost sharing scheme for rehabilitation of the SME sector affected due to coronavirus pandemic.
