Policy to expand tax base, support industrial sector stressed

LAHORE : The Lahore Chamber of Commerce and Industry (LCCI) hosted a consultative session on the formulation of the National Industrial Policy (NIP).

The session chaired by LCCI President Kashif Anwar featured key insights from former Finance Secretary Hamed Yaqoob Sheikh and Usman Khan, Consultant REMIT.

LCCI President Kashif Anwar during his address said that the current policies are designed for those who are in the tax net and for documented industries.

He emphasised that policies should be made to expand the tax base and support the industrial sector. He mentioned that SRO 1842, SRO 350 and the Income Tax Amendment Act 2024 are making the business environment more difficult. He elaborated on the process of petitioner assessment that if assessment by assessing officers exceeds rupees two crores, the petitioner has to go to the tribunal for remedy.

If the tribunal also decides against the petitioner, the next forum is the high court, and for the assessment below rupees two crores, the next forum for remedy is commissioner appeal and then high court. In high court, for attaining stay, the petitioner has to deposit 30 percent value of the assessed amount for seeking stay which will create cash flow problems and other difficulties for the tax payers. He mentioned that according to SRO 350 if the previous supplier will not submit his sales tax return the subsequent sales tax return to claim input tax will not be submitted.

He noted that importing machinery at 25-26pc raises costs, and other obligations like EOBI, LDA, and payment for industries to use highways adds to the burden. He emphasised the need for a thorough examination of these policies to support the industrial sector effectively.

Consultant for REMIT Usman Khan delivered an in-depth presentation addressing Pakistan’s persistent growth challenges. He highlighted the inconsistencies and unsustainable nature of current growth trends, emphasizing the necessity of enabling factors for robust industrial development.

He discussed the lack of export diversification, identifying new potential export products, and the unrealized export potential, while also pinpointing sectors with high growth potential.

He outlined several well-known issues impeding industrial growth, including volatile macroeconomic conditions, political instability, exchange rate variability, and the high cost of capital exceeding 22pc with limited alternative options.

He also addressed the overly regulated economy and competition hindered by cartelization, lack of corporatisation, factor costs and availability, and policy inconsistency which was also highlighted by the LCCI President in his initial remarks.