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Express Tribune
21-07-2025
- Business
- Express Tribune
Trade bodies advocate restoration of final tax regime
Trade bodies have expressed concern over the imposition of the normal tax regime under the Finance Act and proposed several measures to resolve their pressing problems. They have advocated that the final tax regime for the export sector should be reinstated and under this mechanism the tax rate can be increased gradually. They suggested tax rates of 1.5% for FY25, 1.75% for FY26 and 2% from FY27 onwards, adding that this approach would ensure the required increase in revenue without the need for complex tax filings or audits. A high-level delegation comprising representatives from the Sialkot Chamber of Commerce and Industry, Pakistan Readymade Garments Manufacturers and Exporters Association and Pakistan Hosiery Manufacturers Association met with Special Assistant to Prime Minister (SAPM) on Industries and Production Haroon Akhtar Khan on Monday. They discussed crucial matters including the final tax regime versus the normal tax regime, industrial policy and measures to improve the ease of doing business. A major worry was the emerging practice of tax officers, who were demanding an additional 0.5% advance tax from exporters to meet revenue targets. This raises the effective tax burden by 150%, a level that is utterly unsustainable for the value-added export sectors, especially those dominated by small and medium enterprises (SMEs), the representatives of trade bodies said. The final tax regime was introduced in fiscal year 1991-92 with a 0.5% fixed tax on exports. It was a remarkable success as tax collection rose from Rs343 million in 1990-91 (pre-final tax regime) to Rs855 million in 1991-92, reflecting a staggering 149% growth. They stressed that it not only boosted government revenue with minimal administrative cost but also paved the way for exponential growth in exports, particularly from regions like Sialkot, while significantly reducing corruption and discretionary interventions. Over the decades, the final tax regime provided exporters with a simple, transparent and harassment-free taxation model, but the imposition of the normal tax regime increased the burden, they said. The new policy allows a 2% deduction at source on export proceeds (a 100% increase), an unprecedented move that undermines export viability. They pointed out that there was 1% minimum tax and 1% advance tax (total 2%) at source, and 29% tax on companies and 45% on individuals/Association of Persons (AOPs) after assessment. The trade representatives also raised the issue of 10% surcharge on income exceeding Rs10 million for AOPs/individuals and super tax of 1-10% for income exceeding Rs150 million. They were of the view that the shift to the normal tax regime would have significant implications with the potential for unfair practices. The introduction of refunds and complex tax assessments may incentivise exporters to manipulate financial statements to maximise refunds. The normal tax regime could also reduce the inflow of export proceeds as businesses may seek to avoid higher tax burdens by resorting to under-invoicing. Exporters may deliberately declare lower values for goods or services to reduce the taxable income, leading to minimum tax liabilities and parking of funds abroad. Addressing the concerns, SAPM Haroon Akhtar assured the delegation that the government was fully aware of the challenges faced by the business community. "We are committed to taking all possible measures to resolve these issues," he stated. He revealed that a proposal would be drawn up to include a comprehensive and standardised definition of SMEs in the new industrial policy. "A stable and predictable policy framework is essential for attracting investment and ensuring sustainable industrial growth," the PM aide remarked.
Express Tribune
13-07-2025
- Health
- Express Tribune
K-P spending plan long on promises
The Khyber-Pakhtunkhwa government has presented a Rs363 billion education budget for the upcoming fiscal year, marking an 11 per cent increase from last year. Critics, however, have argued that the budget is high on claims and low on credibility. Despite a barrage of promises, from school renovations to new colleges and expanded health coverage, opposition parties have dismissed the budget as a "paper exercise" detached from the dire on-ground realities of a province grappling with economic mismanagement, institutional decay, and widespread corruption. The government's education plan boasts allocations for classroom repairs in 32,500 schools, provision of teaching materials, and extracurricular activities for over 5.9 million students. It also includes Rs1.59 billion for hiring female teachers in girls' community schools, Rs8.54 billion for free textbooks, and Rs855 million for restoring ten historic schools. Additionally, it promises to enroll half of the province's out-of-school children and address teacher shortages through a Rs1 billion allocation to parent-teacher councils. Higher education spending has been increased to Rs50 billion, while Rs2.77 billion has been set aside to convert public colleges into centers of applied sciences and Rs3.5 billion for five new colleges. The budget for public universities has jumped from Rs3 billion to Rs10 billion, alongside a Rs1.24 billion top-up in the scholarship endowment fund. In the health sector, the government has raised the Sehat Card Plus budget from Rs28 billion to Rs35 billion, and earmarked Rs6 billion for extending health coverage to the merged districts. New projects include neonatal care centers in five districts, satellite cardiology units in Mardan and Bannu, and a nursing college in Chitral. Funds have also been set aside for health facility upgrades in Orakzai and Kurram. However, the opposition has branded the budget a farce, with PPP MPA Ahmed Karim Kundi calling it "laughable" and accusing the government of manipulating figures to create the illusion of a Rs157 billion surplus. "They present a Rs416 billion budget but cannot even spend Rs100 billion effectively. The Sehat Card program, touted as a flagship initiative, disproportionately benefits the rich, with 80 per cent of users coming from wealthier segments of society. Public hospitals are in shambles, no new basic health units have been built, and health indicators are declining," he said. Critics also pointed to a crumbling education sector. Over 500,000 children remain out of school, and while the government announces new projects each year, implementation remains minimal. Universities face a crippling financial crisis, with the government reportedly selling off institutional land to manage expenses. Opposition lawmaker from the Awami National Party Nisar Baz accused the PTI-led provincial government of reducing education and health to mere slogans, while failing to build even a single major hospital or university in the last 15 years. "Security conditions in some districts are so poor that teachers can't even reach their schools," claimed an MPA from the ANP. Federation of All Pakistan Universities Academic Staff Association K-P Chapter President Professor Dr Dilnawaz Khan revealed that they were demanding Rs50 billion fund from the provincial government. "Only Rs10 billion has been announced for universities, which is insufficient. The federal government will allocate Rs65 billion for higher education, even though after the 18th amendment it is the responsibility of the provincial government. Universities in K-P are facing a financial loss of Rs20 billion," said Dr Khan. Leader of the opposition, Dr Ibad Khan was more scathing in his assessment, claiming that the budget reflected a governance model built on corruption. "The only thing this government is serious about is looting public funds. From the Chief Minister to his ministers, corruption runs deep," lambasted Dr Ibad, while accusing the ruling party of betraying public trust by using promises of better education and health to win votes while delivering only stagnation and administrative failure.
