Islamabad Chamber of Commerce & Industry (ICCI) has strongly opposed the proposed 6 percent power tariff hike as hinted by Dr. Hafeez Sheikh, Advisor to the Prime Minister on Finance in his maiden press briefing and said that if executed, it will put detrimental effects on business & Industry and will further destabilize the economy.

Chairing a meeting of businessmen, Zahid Maqbool, President, ICCI said that during the last two years, government has increased power tariff by more than 50 per cent, which has exorbitantly enhanced the production cost and eroded Pakistan’s competitiveness in export markets.

He said that country cannot afford any further hike in power tariff at a time when business & industry are struggling for revival and investment is on the decline. He said proposed hike will bring more woes to the economy instead of generating extra revenues as it will reduce industrial productivity & exports, discourage investment, cause closure of more industrial units, increase inflation and unemployment.

He said that government should explore other viable options to generate revenue of Rs.8 billion instead of putting more burden on general public and the business community.

Businessmen said that currently industry, that makes up for 24 percent of the GDP, generates more than 60 percent of tax revenues while the agriculture and services sectors, that together add up to 75 percent of the GDP, contribute very negligible share to tax revenue. They said these discriminations should be eliminated by making every sector and individual to pay tax according to its capacity and capability.

They said that government has decided to implement VAT from 1st July 2010 without taking businessmen into confidence despite the fact that they are the main stakeholders. They said trade and industry are in trouble due to power shortage, security challenges and many other factors and in these unfavorable circumstances, government should not do new experiments.

Zahid Maqbool said FBR has not created proper awareness about VAT in businessmen while tax machinery is also not fully prepared to collect this tax. He stressed that government should defer this tax till the time taxpayers and tax collectors become properly familiar with this mode of taxation.

However, he lauded the government move of linking increase in salaries and pensions of government employees with inflation as it will mitigate the problems of salaried class. But he said that government’s method of calculating inflation normally show it on lower side as compared to on ground reality and urged that inflation should be calculated in a manner that it should reflect true picture of market prices.