The caretaker federal government is actively considering levying taxes to the tune of Rs 150 billion through a presidential ordinance.
According to sources, the government has decided to levy 5 percent withholding tax on the purchase of new vehicles, 17 percent general sales tax (GST) on sugar, and GST to 1.5 percent on all exports.
Besides these, the Federal Excise Duty on cigarettes would be 65 percent of the retail price.
PTEA OPPOSES TAXE INCREASE
Meanwhile, the Pakistan Textile Exporters Association (PTEA) expressed concern over the imposition of a further 1% sales tax and recent increase in withholding tax through presidential ordinance on textile sector, abolishing the sales tax zero rating regime.
In a statement, PTEA Chairman Asghar Ali and Vice Chairman Muhammad Asif termed it as the last nail in the coffin of the textile sector.
“Such unrealistic decisions would adversely affect textile exports of the country at a time when the industrial sector is already in hot waters due to the energy crisis,” they added.
“The changes in the tax regime would add fire to fuel,” he said, adding that the insane decision would adversely affect exports at a time when a huge amount of sales tax refunds are already stuck with the FBR and exporters are facing a liquidity crunch.
The government may study export policies of India, China and Bangladesh where exporters are facilitated through export-friendly policies, he said and added that FBR should announce export friendly policies instead of creating difficulties for the industry.
They further said there would be no level playing field for honest taxpayers instead, it would only result in blockade of their capital in the shape of refunds, increase cost of doing business, shrink export turnover, and compel them to grease palms of tax officers to secure timely refunds.
“In the prevailing economic conditions, rising cost of production is the core issue for textile exporters and this move removing the sales tax zero rating regime on exports would have a negative impact on national economy and exports of the country,” they added.
Asghar Ali said exporters strongly feel that the caretaker government and the FBR purposely want to ruin the vital value-added textile export sector, which is already reeling under load shedding of electricity and gas, hike in electricity prices, deteriorating law and order situation, and strikes.
PTEA office bearers urged the government to drop recent presidential sales tax ordinance for levying further 1% sales tax and the recent increase in withholding tax, immediately. They further demanded to continue the previous zero rating scheme in the interest of the industry.
