LCCI chief says withdrawal of tax exemptions will add to economic woes

LAHORE: President of the Lahore Chamber of Commerce & Industry Mian Nauman Kabir while expressing concern on the Supplementary Finance Bill, said that withdrawal of Sales Tax exemption on the Solar Panels, Taxation on food items, taxation on Equipment for Green House Farming, raw material of Engineering Sector and raw material of pharmaceutical sector will add to the miseries of the economy.

While president a meeting of the stakeholders, the LCCI President expressed surprise on the timing of the supplementary finance bill saying that at a time when the trade and industry need handholding of the government and supportive measures, the government has imposed taxes on various sectors of economy and withdrawn the exemptions in order to meet the conditions of the International Monetary Fund (IMF).

He said that it is a negative move and it will further enhance the cost of doing business, give rise to the inflation, discourage the use of alternative energy resources, hinder business growth and hit the confidence of the foreign as well as local investors very hard. The LCCI President said that the 17 percent Sales Tax worth Rs 343 Billion are being imposed on more than 150 items which include machinery, pharmaceutical and imported food items will hinder the economic growth.

Mian Nauman Kabir said that the imposition of proposed 17 percent Sales Tax on imported plant and machinery will make it difficult for our industrial sector, particularly SMEs to undertake technological up-gradation and hence the export competitiveness of our Industrial sector will be adversely affected.

This measure can start a new wave of De-industrialization in the country. It is only after a great difficulty that our industrial sector came out of the trap of negative growth rates (-3.77 percent in 2019-20) and grew by around 3.57 percent in 2020-21.

Mian Nauman Kabir was of the view that manufacturing of our hi-tech sectors would also be affected by the proposed measures in the mini-budget. On one hand, the Government has recently introduced the Mobile Device Manufacturing Policy to encourage the local production of mobile phones while on the other the Government is imposing Sales Tax on import of machinery for Mobile Phones manufacturing.

The LCCI President clarified that our industry is heavily dependent on imports of quality raw materials as they are not available locally. The imposition of Sales Tax on the raw materials of pharmaceutical industry would hinder the growth of pharmaceutical sector which has been showing a sound performance since the last couple of years. Our pharmaceutical exports have increased to US$ 273 million in 2020-21 as compared to US$ 215 million in 2019-20. This measure can dent the export competitiveness of our pharma sector and reverse the trend of increasing exports.

Copyright Business Recorder, 2022