Increase in tax exemption limit due to inflation and rupee depreciation demanded

General Karachi

KARACHI: The Union of Small and Medium Enterprises (UNISAME) has invited the attention of the caretaker prime minister (PM) Mir Hazar Khan Khosa to the urgent need to appoint an economist as finance minister promptly in view of the severe economic issues inherited by the caretaker PM and suggested the names of well known personalities like Dr Ishrat Hussain, Zakir Mahmood former president Habib Bank or Salim Raza ex governor State Bank of Pakistan who are considered as financial experts and are capable of taking important decisions to save the country from economic crisis by taking remedial measures.

President UNISAME Zulfikar Thaver said the caretaker government would need to start preparations for the forthcoming budget and will need to take bold steps to overcome the situation despite being just caretakers. The rupee has depreciated and needs economic crutches and the finance minister needs to comprehend the situation correctly and overcome the situation by applying economic tools promptly to avoid further depreciation.

Although the caretaker government is not expected or supposed to take important decisions and focus only on holding free and fair elections but nevertheless the situation demands that the caretaker government take steps which cannot wait till the next elected government comes in place.

He stated that therefore in the budget proposals submitted to the Small and Medium Enterprises Development Authority (SMEDA) the union has emphasized the need to take immediate bold steps and abolish import duties on alternate energy devices to promote the installation of alternate energy systems by the industrialist as summer is at the anvil and energy shortage is expected.

He said due to high import duties on solar panels and parts, wind mills and bio gas generation systems the industrialist are the import which is proving costly due to the depreciation of the rupee in terms of foreign currency and secondly even the maintenance is a costly affair due to import duties on parts which need to be replaced from time to time.

He urged the exemption of alternate energy devices from import duties to promote the import of solar energy, wind energy and other power generation equipments based on fuel, bio-gas and gas to cope with the energy crisis. He said it would be a wise decision to place alternate energy devices on 0-duty to encourage industrialist adopt alternate energy systems in their feasibility.

The union has also invited the attention of the caretaker PM to the need to exempt farm equipment from import duties and place tractors, harvesters, diesel generators and other farm equipments on duty free list. He pointed out that since the government is not giving any subsidies it is advisable that the farmers are provided encouragement to modernize for increasing productivity on fast track basis.

Other recommendations given by the union experts related to improving the systems of banking, insurance, leasing and logistics for the SME sector by making finance affordable, making the banks comfortable in financing the SMEs by providing insurance cover to the banks, promoting pay as you earn schemes through leasing and strengthening logistics for farm produce.

The union has also demanded to increase the tax exemption limit due to inflation and rupee losing value to Rs600000 for individuals and accordingly for Association of Persons (AOP) as most of the firms are family owned firms where the family members are partners and work together for mutual interest.

Finally the union leaders stressed the need for priority for the sector with a true SME Bank supported by an SME fund. SME Insurance, SME Leasing, SME Export House and an SME Chamber of Commerce to facilitate, encourage, promote and motivate the sector and demanded that the caretaker finance minister make positive provisions for funding the proposed institutions which are pending due to lack of funds and political will of the ex-government.