Cotton byproducts: PCGA rejects imposition of 1.5 percent turnover tax

ISLAMABAD: Pakistan Cotton Ginners Association (PCGA), while rejecting imposition of 1.5 percent turnover tax on cotton byproducts, said the step would force the ginners to shutdown their businesses.

This was stated by PCGA President Dr Jassu Mal in a statement released here on Tuesday.

He said that despite the assurance by the Federal Board of Revenue (FBR) high ups and relevant ministries, the government had not taken any step to withdraw the 1.5 percent turnover tax on cotton byproducts.

Mal said that this step by the FBR would immediately increase input costs of cotton farmers by Rs100 per 40kg, which would further discourage the farmers.

He said that cotton producers were already under serious pressure, while imposition of further taxes on byproducts would further create disappointment among them as a result national cotton production would decline further.

He said that cotton production due to various reasons on top of them government's inaction had already declined from 15 million bales to five million bales, and if imposition of further taxes continued within the next few years, cotton production would be abolished from the country.

The PCGA president further said that to boost up the country's exports, the government should provide incentives to the sector instead of punishing the sector with imposition of taxes.

He said that as a result of the decline in cotton production, Pakistan was spending additional $300 million dollars on the import of raw cotton, while additional $100 million was being spent on the import of cooking oil because of non-availability of cotton seed.

He urged the government to come up with a clear policy on cotton production by giving incentives to cotton producers, and withdrawal of additional taxes imposed on the ginners and allied businesses.

Copyright Business Recorder, 2020