LAHORE - The financial experts, stock market analysts and the business community have said that the federal budget is not as per expectations of the business community as well as the masses but it offers some hope, pointing out that the government once again failed to impose taxes on the country’s elite.
The Lahore Stock Exchange Managing Director Aftab Ahmed Ch said that after the recent round of meetings with Ministry of Finance and FBR, it was expected that CGT may be deferred at least for the individual investors who have been deserting the market causing volumes in FY11 to decline to 8-year low of Rs4 billion a day, down 50 percent from last year.
This will not only affect the market depth and volumes but will have adverse implications to the government plan to privatize its units through the stock market. He said that the trend of IPO that slowed down last year with only one offering will remain affected thereby having impact on the capital formation.
He said that individual investors will continue to pay 10 percent CGT if shares sold within 6 months and 8 percent between 6-12 months. Banks, insurance firms, mutual funds and other corporate will continue to pay CGT as per their specific rules and there is no change in this Budget.
Dr Qais Aslam, a noted economist, said that budget hardly offer any relief for the poor or business community and has nothing to attract investment.
He said that the government has again failed to raise taxes on the elite to cut a whopping deficit which has left us dependent on debt. He said that exempted sectors like agriculture, property and services have not been touched in the budget which is unfortunate. Dr Qais welcomed the announcement of adding 2.3 million people to the tax net saying that if materialised, it will resolve many problems. It is not a difficult task as we have four million commercial electricity connections and millions of commercial gas connections in the country. He said that budgetary framework is unrealistic both in terms of targets and resource mobilization. Budget estimates are routinely out of focus and thus often missed by wide margins. Fiscal deficit is expected to be in the range of 5.5-6.5 per cent of GDP as against the revised target of 5.4 per cent.