The Lahore Chamber of Commerce and Industry has said that imposition of 16 percent General Sales Tax and decision to allow import will not only ruin the tractor industry but it would also have fatal repercussions on the agriculture economy and engineering industry.
The LCCI office-bearers, President Shahzad Ali Malik, Senior Vice President Sheikh Mohammad Arshad and Vice President Sohail Azhar in their joint statement on Wednesday said that the imposition of 16 percent General Sales Tax on tractors has resulted in the closure of tractor plants and 300 tractor parts manufacturers for the last 2 months.
No industry in Pakistan has remained closed for such a long period but the irony of the situation is that it has been created by the Government itself and neither any remedy is in sight nor government showing any signs of concern.
They said that approximately 80,000 tractors were produced in the country last year averaging 6000-7000 tractors per month but after the imposition of sales tax this sale has nose-dived to 500 tractors a month. So the FBR's claim of generating revenue by imposing GST on tractors has had quite opposite effect.
The government on the pretext of bringing agri income under tax net and increase the tax to GDP ratio imposed 16 percent GST on tractors. He said that in India GST on tractors is 4-5 percent. Europe levies a tax of 8 percent and in other countries around the world, the rate of tax on agri inputs is generally lower or these inputs are subsidised. It is unfortunate that the government has suddenly imposed 16 percent GST on tractors. The tractor is an expensive product and levying of such high rate of GST has taken it beyond the buying power of the farmer, and forced the industry to close down.
The LCCI office-bearers suggested that GST should be 8 percent at the initial stage and more schemes be introduced for boosting mechanised forming in view of devastation by recent floods for enhancing agriculture implements sale.
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