Sarhad Chamber of Commerce and Industry (SCCI) has called for exemption of General Sales Tax (GST) on electricity used in export goods production, sugar produced from beet and income tax on private universities, abolition of Export Development Surcharge (EDS) on export to Afghanistan and development of export finance bank in the province.
The demands have been made in Trade Policy Proposals for the year 2006-07 by the chamber and a copy has already been submitted with the Ministry of Commerce for the inclusion in the next financial year national trade policy of the country.
The recommendations said that under Sales Tax notification SRO 247 (1)/2006 514 industrial units using KESC distributed electricity have been given exemption of GST on electricity.
The SRO provides lawful benefit for major industrial units in Punjab and Sindh, while industries of other provinces have not been extended such incentives. The chamber has suggested the extension of the incentives to the industrial units of other provinces and working out methodology for it.
In demand for exemption of sales tax on sugar produced from sugar beet, it elaborates that sugar industry in NWFP has the unique facility of sugar beet slicing to produce sugar and have a capacity to produce 40,000 metric tons of beet sugar in addition to sugar from sugarcane.
It said that unlike sugarcane that has baggasse as its fuel, sugar beet is dependent on external fuel of sources ie furnace oil and natural gas. With current fuel prices, the chamber said, the sugar mills spend approximately Rs 7, 500 to produce one metric ton of sugar. Prior to decontrol of sugar ie 1983, the government realising this fact paid Rs 11 mound over and above the price of sugar produced from sugarcane. In 1983 ie after decontrolling the incentive one cannot offer different prices sugar.
The decision resulted steep decline in production of sugar that persisted until 1985, when government realised the situation and came to the rescue of the industry and announced exemption of excise duty to compensate the sugar beet industry for the cost of additional fuel. But, unfortunately this exemption was withdrawn in July 1999 resulting in drastic cut in sugar production from sugar beet and the factories are at the verge of closure of beet sugar operations due to heavy losses from beet sugar operation contributed due to 6 times high cost of fuel compared to 1983.
Now the sugar industry is paying sales tax instead of excise duty on beet sugar. The chamber has suggested the exemption of sales tax on previous pattern to enable the industry to run the beet sugar operations.
The SCCI proposals for trade policy while demanding exemption of income tax for private universities has appreciated the initiative of granting charter for establishing private universities and formation of Higher Education Commission (HEC) to monitor the implementation of the rules and regulations.
However, it said that besides fulfilling formalities of HEC and other academic activities, it has become very difficult for private universities to attend time consuming hearings in income tax offices and provide those details and documents. Furthermore, it said that the direct and indirect taxes have ultimately transferred burden to students and for reduction in fees the private universities deserve exemption from income tax.
The recommendations of the SCCI for trade policy has suggested exemption of the collection of Export Development Surcharge (EDS) on export to Afghanistan for a period of at least five years and decreasing withholding tax to the level of 0.5 percent. It has also asked the government of Pakistan for taking up the matter of Elmul Khabar with the Afghan authorities.
It has also called for discouraging export of commercial items through non-governmental organisations to Afghanistan and they would be allowed to export machinery and equipment for Afghanistan as donation/grant and the commercial items should only be allowed through adopting commercial export documentation under SRO 137.
The chamber has also suggested the establishment of an Export Finance Bank to facilitate exporters in obtaining loans directly without usual obstacles and delays.
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