ECC rolls up sleeves for filling national kitty

  • ECC approves new textile policy, new drug policy, permits Punjab, Sindh to export 100,000 tonnes of flour
  • ECC decides to increase regulatory duty on import of luxury items by 5%, levy 5% regulatory duty on import of furnace oil, metal scrap


The Economic Coordination Committee (ECC) of the Cabinet at its meeting in Islamabad on Monday approved new Textile Policy 2014-2019.

Federal Minister for Finance Senator Mohammad Ishaq Dar chaired the ECC meeting at the prime minister’s office on Monday.

After detailed discussions and deliberations, ECC considered and approved the proposed “Textiles Policy 2014-19” subject to deletion of Section 12.3 of the policy related to textile development fund out of export development fund. The issue will be decided by a committee under the chairmanship of planning minister with Ministers of commerce and textiles as members. The committee will report back within one month.

Among others, the key features of the policy include doubling value addition from $ 1billion per million bales to $2 billion, doubling textile exports from $ 13billion to $26 billion, facilitating additional investment of $ 5 billion in technology and machinery, improving fibre mixes in favour of non-cotton i.e 14 per cent to 30 per cent, improving product mix especially in the garment sector from 28 per cent to 45 per cent, facilitating creation of three million new jobs and strengthening textile firms with focus on SME sector by improving their level of compliance with international standards in respect of labour and enabling them to adopt modern management practices.


ECC also considered and approved the long standing “Drug Pricing Policy” after a detailed presentation by Minister of State for National Health Services, Regulations and Coordination Saira Afzal Tarar.

The draft policy has been discussed with all stakeholders. The statutory process will be completed under the rules of the Drug Regulatory Authority.


On a proposal moved by Ministry of National Food Security and Research for enlarging the scope of export of wheat, the export of wheat flour was also allowed by the ECC.

It will be mandatory for the exporters to export one metric ton of wheat flour to claim subsidy for equal quantity of wheat procured from the provincial food departments of Punjab and Sindh.

In an earlier meeting of the ECC, Punjab and Sindh were allowed to export 1.2 MT of wheat. The chair also directed that the rebate claims of the exporters will be entertained without any delay on the submission of the necessary documents by the exporters.


On the proposal moved by Federal Board of Revenue (FBR) for withdrawal of sales tax on cotton oil seed cake, the ECC decided that the sales tax currently payable at 5 per cent of the value of cotton oil-seed cake will be withdrawn with immediate effect subject to Pakistan Cotton Ginners’ Association (PCGA), agreeing to becoming the withholding agents for collection of 2 per cent sales tax on cotton seed with effect from July 1, 2014 as proposed by FBR.

The ECC on a summary forwarded by FBR took the following decisions:


ECC approved higher rates of withholding taxes (WHT) for importers and service providers who are non-filers of income tax returns, in order to encourage return filing and documentation in economy. The rates proposed to be revised are in respect of non-filers only.

The rates of WHT shall remain unchanged for compliant taxpayers who file their returns regularly and their names appear on Active Taxpayers List. The distinction of filer and non-filer is being extended to these sectors to increase cost of doing business for non-filers and to encourage compliant-taxpayers.

Earlier, through Budget Act 2014-15, a distinction was created amongst filers and non-filers and higher rates of WHT were levied on non-filers to increase their cost of doing business for certain transactions including sale/purchase of immovable property, purchase of vehicles, issuance of dividend, cash withdrawals from banks etc.

Increasing rates of WHT for non-filers will provide incentives to those taxpayers who have been filing their returns regularly. This aspect has been kept in mind while increasing WHT rates. Still those non-filers who want to come into mainstream by filing their tax returns can avail concessional rates available to filers once they file their returns and are included in active taxpayers list.


International prices of luxury items, like packaged foodstuff, chocolates, cosmetics and electric appliances etc are showing a declining trend, negatively affecting the revenue of the government. These items are not of daily use, and are purchased by high-end consumers.

For bringing more equity into taxation system by enhancing the duties on goods consumed by affluent segments of society, it has been decided to increase regulatory duty on import of luxury items by 5 per cent.


Because of tremendous decline in oil prices, sales tax on petroleum products was recently increased from 17 per cent to 27 per cent. However, tax rates on import of furnace oil were kept unchanged. There has been a decrease of around 50 per cent in international prices of furnace oil.

For meeting partially the revenue loss on account of huge fall in prices, it has been decided to levy regulatory duty at 5 per cent on import of furnace oil. This will also provide a cushion against increase in prices if and when the international prices start to go up again as we will withdraw the RD at that stage. This will not have any effect on energy tariff.


International prices of metal scrap are also showing a consistent declining trend. However, there has hardly been any pass-on effect of the decrease on consumers, as prices of goods manufactured from metal scrap have not come down. In view of fall in prices, it has been decided to levy regulatory duty at 5 per cent on import of metal scrap.