MCCI demands withdrawal of proposed sales tax on exports

Expressing his concern on the proposal of levy of 5 percent sales tax on cotton yarn and raw material of textile and cottage industry, President of Multan Chamber of Commerce and Industry (MCCI) Shahid Naseem Khokhar said that this levy would cause increasing the rate of inflation, production cost of fabrics, grey cloth and other exportable textile made-up.
This step would minimise the margin of profit, lessening the interest as well as profit of the exporters. He said that the government has opened a new door to bribe for the Federal Board of Revenue (FBR) by imposing sales tax on exporting sector.
Now, manufacturers-cum-exporters will start importing things (raw material) and sell them in local market. It might pave way for the biggest ever sales tax evasion scam in history of Pakistan in coming one year. He said that negative impact would emerge if the sales tax was imposed on five exporting sectors. He said that, presently, exporters were paying one percent tax only while imposition of tax would not affect the existing sales tax payers but it would net the evaders. He said inflation rate was 14 per cent, which would be increased to 19 percent after sales tax imposition.
He said that if the government controlled the discrepancies and loopholes, it could collect billion of rupees from wetblue export only. He said the government had imposed tax on import and export, rather than broadening the tax net and closing the loopholes of tax evasion. He said that, in real term, exports level had come down.
Shahid Naseem Khokhar said that it would not be possible for the exporters to meet the target fixed for the coming financial year. President appealed to the government to withdraw proposed sales tax on exports to stay in world market. He said that Pakistan was already losing the international markets due to the highest cost of production and our competitive countries, like Bangladesh, india, Thailand, Malaysia, Indonesia, China and other countries were capturing these markets. He said that higher rate of mark-up, gas and power tariff, price of raw material had created troubles for the manufacturers and five percent sales tax on exports would add to their miseries.