The budget 2010-11 has not announced any worthwhile relief measures for trade and industry, rather some actions taken in it would push up the cost of doing business and promote smuggling of many items.

This was the opinion of traders and industrialists in a meeting at Islamabad Chamber of Commerce & Industry (ICCI) while discussing Federal Budget 2010-11. They said some incentives should have been announced for the revival of industry as it has suffered badly due to energy crisis and many other factors.

Chairing the meeting, Mr.Zahid Maqbool, President, ICCI said that budget has increased tax rate for small companies & AOPs, which will have a negative impact on the growth of business activities. He said this step will also discourage new investment in SME sector, which is the engine of growth for economy.

He said increase in federal excise duty (FED) on natural and petroleum gases would also increase production cost, particularly of those industries for which gas is a major input. He said levy of 10 percent FED on air conditioners/deep freezers could also trigger the smuggling of these items and if that happened, it will hit the local industry of these products.

Businessmen said that 0.3 percent advance tax on various banking transactions like withdrawals through demand draft, pay order, online transfer, telegraphic transfer, TDR, CDR, STDR & RTC  would also put extra financial burden on them as they often have to resort to these transactions for running business.

They said that government has reduced withholding tax on electricity bills from 10 percent to 5 percent, but it will not give any substantial benefit to the domestic and commercial users of electricity as government has already given 60 percent hike to power tariff during the last 2 years.

They said this single factor has badly crippled the business and industrial activities in the country apart from putting unbearable burden on general public. They said with the withdrawal of subsidy on electricity in the new budget, power cost would further go up by 30-50 percent unleashing a new wave of inflation and crippling industrial activities.

Mr.Zahid Maqbool said that the government has targeted 4.5 percent GDP growth rate for FY 2010-11, but  has entirely ignored the agriculture and industries, which are the main pillars of the economy. He was not sure that government would be able to achieve this ambitious growth target without giving some sort of tangible relief to these key sectors of the economy.