FAISALABAD – As the textile industry of Faisalabad has given an ultimatum to a shutter-down strike to protest the imposition of 17 percent sales tax and flood surcharge, Finance Minister Abdul Hafeez Sheikh has called a meeting of traders in Islamabad on March 26 (Saturday). “The textile industry of Faisalabad which is already dying a slow death has rejected the flood surcharge and implementation of 17 percent sales tax announced by the government,” said former Faisalabad Chambers of Commerce and Industry President Sheikh Abdul Qayyum at an emergency meeting of the textile associations coming under the umbrella of FCCI.
“The trade organisation has issued a seven-day ultimatum to the government to withdraw the new taxes failing which we will have no option but to close down the factories,” warned Sheikh Abdul Qayyum. “The taxes in question are not practicable in terms of procedural and administrative implementation,” Abdul Qayyum and added these new taxes would crush the industry and break the back of the masses.
The meeting was attended among others by FCCI members, including former FCCI President Mian Javed Iqbal, Sheikh Khalid Habib, Anjuman Tajiran City President Khawaja Shahid Razzaq Sakka, Chaudhry Abdul Haq, Shakeel Ansari, Chaudhry Salamat Ali, Waseem Latif, Rana Talab Hussain, Amjad Aqeel, Amjad Ali Amjad, Muhammad Farooq, Muhammad Saeed Sheikh, Mian Shabbir, Engr Rizwan Ashraf and Zafar Iqbal Sarwar. The meeting was also attended by the associations of all the components of textile, including sizing, processing, spinning, weaving, foundry, power looms, hosiery, chemicals, curtain manufacturers and a number of other stakeholders The ultimatum was given at a time when textile sizing industry is already on strike to protest against the imposition of sales tax resulting in the suspension of raw material supplies to the local power looms sector, the move that pushed thousands of daily wage workers to stay home.
The new situation arose on March 16 when the government announced to re-impose 17 percent sales tax on textile industry withdrawn in 2007 to relieve the textile sector. Sheikh Abdul Qayyum said they were all unanimous to reject the sales tax and would resist it in a last-ditch effort to avoid the shutdown of the industry. He regretted the government has not taken them into confidence before taking the decision. “We still believe that negotiations between the authorities and traders can help find a solution, but the government side is not interested in listening to us,” he lamented and reiterated they would go on strike and shutter down if their demands were not met within one week. Qayyum proposed the government could build up a new tax base by introducing agriculture tax in the country.
All Pakistan Processing Mills Association Regional Chairman Muhammad Saeed Sheikh said the government, to increase its revenue, must control smuggling which is in progress under Afghan Transit Trade. He feared textile industry would not withstand the heavy taxation that was the highest in the world. He predicted that a suit piece (shalwar-kameez) available between Rs 500 and Rs 1,000 would no longer be available in the coming days due to increased production costs. Sheikh Saeed said local industry would continue to suffer at the hands of smuggling until something was done.
Referring to the 30 percent increase in textile export this year, he said it was not due to increase in export volume; it was rather a result of rise in cotton prices in the international market. “International textile players want us to export our raw material to them and buy finished goods from them that is illogical,” he argued.
Sizing Association President Shakeel Ansari said: “We have closed our factories after facing heavy losses caused by the energy crisis. The current tax rules are a serious blow to our industry that is already struggling for life in ICU.”
The local industrialists have a united stance that taxes are always transferred on consumers, causing substantial price increase. “It is estimated that total number of taxpayers in Pakistan is not more than 2.5 million out of the population of 180 million. That is why every government, instead of laying down a tax system, thinks it easier to levy tax on petrol to get overnight revenue, which results in price hike”, said a trader.
The latest reports say that a delegation of prominent businessmen from Faisalabad, Syed Faheem Mahmood Shah, Waheed Khaliq Ramay, Yousuf Moti, Omer Nazar Shah and Mirza Shafiq Ahmed, is scheduled to meet Federal Finance Minister Abdul Hafeez Sheikh in Islamabad on the next Saturday.
