By Tasneem Yaseen
Prime Minister Imran Khan and the government have in recent months focused on improving the economy and are working hard to resolve issues and work on problems that had led to a stagnant economy. What has happened to the economy happened over many years and it will hardly recover in a day, but at least the task has been taken up with gusto and with an aim to provide relief to the masses.
Federal Finance Minister, Asad Umar, presented Finance Supplementary (Second Amendment) Bill of 2019 this January with the express aim of boosting the economy and providing ease of doing business. He said it was not a budget but an economic reforms package that would boost manufacturing and exports and encourage low-cost housing. It also facilitates agricultural financing to promote economic activities. The package will lead to simplifying procedures for setting up businesses and making investments and in the long term create jobs.
Here we take note of some salient features of this pro business package: Tax on income generated from loans to small businesses, agriculture sector and low-income housing to be reduced from 39pc to 20pc and introduction of interest-free revolving credit of Rs5 billion (qarz-i-husna). Ban on purchase of vehicles for non-filers lifted for new locally manufactured cars up till 1300CC capacity, but higher taxes will apply. While import duties on cars with engine capacity of 1800CC and above to be increased.
An especial announcement: withholding tax on bank transactions waived off for tax filers. Small businesses exempted from submitting withholding tax returns every month; will do so only twice every year. Super tax on non-banking companies to be abolished from July 1, 2019. Duty on newsprint abolished completely so as to encourage the media.
Other features are that investment in solar panels and wind turbines to be exempt from duties and taxation for five years. Machinery for greenfield projects to be exempt of customs duty, sales tax and income tax for five years. Taxes and duties on mobile phones rationalized: taxes on budget sets to be reduced, high-end sets to become more expensive. Tax refunds to be worked out; promissory notes to be issued by mid-February. And other such measures.
A return to IMF for corrective action should be a last resort; Pakistan has the capacity to do better on its own terms. Even if IMF help is taken burden should not pass to the poor. This government is working hard to avoid such drastic steps so as to not overburden the country.
The Pakistani currency has recently recovered to a seven-week high at Rs138.78 against the US dollar in inter-bank market according to the State Bank of Pakistan; the pro-business mini-budget was the main reason. So we can see how quickly confidence can be restored.
Economy is the paramount concern of the government as it realizes that without a robust economy Pakistan cannot thrive. Sustainable financial growth and a stable society will lead to prosperity, better living standards and future gains. This government wants to give all segments of society an equal chance of furthering their lot through monetary empowerment. For this difficult decisions had to be made and the good news is that these difficult decisions are yielding dividends: the deficit is reducing, exports are increasing and imports are declining. Further reforms will bring about sustained growth of the economy and hopefully this is just the beginning of a rapid rise.
