Knitwear apparel sector has demanded continuation of the zero-rated sales tax regime for export sectors particularly for textile since any shift in the system would hurt this vital sector of the economy. This demand has been made by Adil Butt Chairman Pakistan Hosiery Manufacturers Association (PHMA) and Shahzad Azam Khan, Chairman Pakistan Knitwear and Sweaters Exporters Association (PKSEA) in a joint statement issued here on Saturday.
They said that structural changes are being proposed to be introduced in the name of taxation reforms to enhance further burden on the existing tax payers and to replace the present textile specific zero-rated sales tax system in vogue and the withholding tax system with a complicated alternative mechanism with the aim of generating more revenue from existing tax payers.
They said that the people already registered as tax payers have been contributing to the maximum possible extent their due share towards national exchequer. In a letter addressed to the Prime Minister, both the Associations highlighted comparative situation of Pakistan with rest of the world.
"Our tax payers are facing acute shortage of gas and electric power, the profile of our country in the wake of law and order situation and terrorist attacks has caused serious damage to our business activities and we are paying much more mark up as compared to our competitors"., they argued and added " against all these negative factors, we have to survive in this competitive world".
On the other hand, they contended, global recession has badly hit even the affluent economies but they are coming up with relief packages as a rescue measure according to respective sizes of economy while Pakistan has not remained safe from the hot winds of global recession.
"Now that every economy is being supported by the governments, therefore, our economic managers should not devise strategies to further squeeze the business circles because they do not have more blood in their body, they added.
They said that the industry was of the view that the so-called proposed taxation reforms would not be able to produce desired results to increase the government revenue; rather squeezing the existing tax payers would have negative impact because business enterprises were already suffering losses and could not afford more tax burden.
"A suitable strategy can only be to bring more areas of economy in the taxation net and to enhance the capability of all the tax payers to pay more instead of increasing the burden on the existing tax payers whose capacity has already exhausted", they emphasised.
Adil Butt alleged that this was an intrigue against present system of taxation which over the last so many years has been working properly and exhibiting increasing trend in the overall revenue collection. He reiterated that any departure from present system would be harmful for the whole system.
Butt and Shahzad were of the view that there was no justification for paying the tax and later on claiming refund through a system which gives way only to corruption. It may be added that apparel manufacture is an important value-added sector of the textile industry of Pakistan.
This sector manufactures and exports ready-made garments, woven as well as knitted, of all types such as trousers, ladies suits, jeans, children garments, maxis, blouses, skirts etc. The knitwear products include jackets, blazers, men/boys knitted trousers, shirts, T-shirts, track suits, socks, gloves and other knitted garments of cotton, wool, artificial synthetic and other fibers etc.
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