KARACHI: When called upon to ask their opinion on the measures proposed for the capital markets in the budget announced by the besieged finance minister on Friday, market participants, brokers and investors in equities expressed varying views.

There was no dearth of investors who, having stung by the budget in the past four successive years, heard all that was doled out to the corporate sector and investors, with disbelief.

Gradual decrease in income tax on corporates from current 30 to 29pc for the next fiscal, followed by reduction of one per cent every year to reach 25pc in 2023; cut in super tax from 4 to 3pc for banks and 3 to 2pc for non-banking companies and removal of tax on issue of bonus shares were thought to be extremely positive for the corporate sector.

Arif Habib, former chairman of the exchange reckoned that the budget was “Investor friendly”. He said that foreign direct and portfolio investors who avoided Pakistan, insisting that the country was not competitive in tax regime, would be encouraged to look hard at the current measures which could promote investment.

He observed that the other objection of the overseas investors regarding high cost of gas and electricity remained to be addressed.

Mohammad Sohail, CEO Topline Securities, said that the biggest positive surprise was the reduction in corporate tax rate which was a long-standing demand of the investor community.

He said that while the former finance minister believed in saddling the corporate sector with more taxes, Miftah Ismail being himself an industrialist and businessman seems to believe in providing relief to industries so as to allow them earn greater profit for the good of the industry and investors. He hailed the relief in tax to salaried and non-salaried class.

There were investors who wondered if the current budget was a departure from the philosophy of the former finance minister Ishaq Dar who they said believed in killing the goose that lays the golden eggs and collect all eggs in one go.

Conversely was the budget incentives to both industries and individuals (through reduction in income tax)a populist measure in the election year?

While most looked at the glass half full, some were seen sulking on demands that even the emboldened new finance minister had swept under the carpet. “A major demand of the bourse of removal or slab-wise levy of capital gains tax (CGT); abolition or reduction of dividend tax rate and inter-corporate tax have been overlooked”, said a mutual fund manager. He was, however, glad over the removal of tax on bonus shares for mutual funds and banks are keen to retain cash and favour bonus issues. Industrialists were happy over the budget proposals.

Asif Jooma, CEO ICI, said that a cursory glance at the budget proposals seemed to be ‘pro-business’ and encouraged documented economy. He believed that leaving it up to the corporates to decided between profit retention and distribution would give boost to investment, create jobs and have an overall salutary impact on the economy.

A head of an independent power producer (IPP) was all praise for the budgetary measures but said that some concrete decision on the solution of the problem of perennial inter-corporate debts would have helped the entire energy chain. An individual investor who dabbles in the stock market and has been wiped off 20pc of his wealth in the persistent market decline over the past year grumbled that corporates may be tempted to reduce distribution of dividend to shareholders as they have now have the choice to fatten reserves.

Published in Dawn, April 28th, 2018