Industries want to treat wastewater, but high import duties on treatment plants make it very costly. We proposed duty exemptions to encourage clean and sustainable industrial practices.
By M Qadeer
Q1: Engineer Khalid Usman, what motivated the Lahore Chamber to present these extensive budget proposals?
A: The 2025–26 Federal Budget is crucial for Pakistan’s economic revival. Given the current economic challenges, the LCCI felt a strong responsibility to contribute constructively. Our proposals reflect consultations with our members and various sectors. We aimed to highlight actionable solutions for lowering the cost of doing business, simplifying procedures, and promoting investment.
Q2: You emphasized reducing the cost of doing business. Can you explain how your proposals address this?
A: Yes, our proposals recommend simplifying regulations, easing tax compliance, and improving refund mechanisms. We also proposed a restructuring of the tariff system to make raw-materials cheaper and discourage finished goods imports — this helps local industries grow.
Q3: What’s the rationale behind opposing the Ministry of Commerce’s 0 to 20 per cent blanket tariff regime?
A: Blanket tariffs harm local industries by removing the protective layers they need. We support a cascading tariff structure that differentiates between raw materials, semi-finished, and finished goods. This encourages local manufacturing and adds value domestically.
Q4: Water treatment plants were mentioned. Why did you prioritize this?
A: Environmental compliance is no longer optional — it’s a global requirement. Industries want to treat wastewater, but high import duties on treatment plants make it very costly. We proposed duty exemptions to encourage clean and sustainable industrial practices.
Q5: Let’s talk taxation. Why is the SME definition so important?
A: FBR currently defines SMEs differently than SMEDA. We urged alignment — businesses with up to Rs800 million turnover should qualify as SMEs. This brings more firms into the documented economy under a fair and simpler tax regime.
Q6: What do you propose for exporters who were moved from FTR to MTR?
A: It’s an unnecessary burden. Under MTR, exporters must calculate full taxable income and might end up paying more taxes despite already paying 1 per cent on exports. We urged the government to revert to FTR for simplicity and fairness.
Q7: You proposed a fixed tax regime for traders. How would that work?
A: We suggest starting with a minimum fixed tax, regardless of business size, and then developing slabs based on revenue and category. It simplifies taxation, improves compliance, and removes the fear of audits and harassment.
Q8: Super tax has been a point of contention. What’s your view?
A: Applying super tax based on presumed profit from turnover — even for loss-making businesses — is simply unjust. Tax should reflect actual profitability. We want fairness, not punitive assumptions.
Q9: You raised concerns about new reporting requirements under SRO 55(I)/2025. Could you elaborate?
A: The new annexes (J and H1) demand extensive production and stock data, leading to harassment through notices and raids. It’s counterproductive. We called for their immediate withdrawal to restore business confidence.
Q10: What are your suggestions regarding refunds?
A: Exporters rely on timely refunds for liquidity. We emphasized enforcing the 72-hour window for sales tax refunds under FASTER. Delays sometimes stretch to a month. We also proposed interest payments on late refunds and automation of income tax refunds.
Q11: How do you view the issue of foreign assets declared under past amnesty schemes?
A: Freezing accounts and issuing notices despite pending court decisions is unfair. It undermines trust. We demanded a halt to such actions until legal clarity is provided.
Q12: What’s your stance on policy consistency?
A: Economic policies must be long-term — spanning at least 10 years. Frequent changes derail investor confidence. We’ve urged for a stable policy framework focused on sustainability.
Q13: Finally, what’s your position on the Sindh Infrastructure Development Cess (SIDC)?
A: The 1.8 per cent SIDC on exporters is a non-refundable burden. It hurts our competitiveness in global markets. We recommended its complete abolition.
Q14: Any final message?
A: The LCCI is fully committed to working with all stakeholders — government, industry, and civil society — to drive industrial growth, enhance ease of doing business, and ensure Pakistan’s economic prosperity.
