ISLAMABAD: Steel & Edible Oil & Ghee industries are deeply concerned over reports of govt’s intention to withdraw/ reverse the budgetary amendment/ measures of gradual phasing-out of Fata/ Pata tax exemptions in the final Finance Act 2024-25, says Pakistan Assosicaiton of Large Steel Producers (PALSP).
In a statement here it said under political pressure, the govt seem to be all set to withdraw/ reverse the Fata/Pata related amendments that were announced in the Finance Bill.
‘The move is being taken under pressure from the influential politicians will be most damaging for the local industry, despite the fact that it is being opposed by IMF. If this happens, we have no doubt that it would be most damaging single measure which will further push the local struggling industry of the country towards closure!! Also, Steel & Edible Oil & Ghee industry will go on indefinite strike against this move which is aimed to support rent seekers at the cost of entire industry.’
In a statement issued by Pakistan Association of Large Steel Producers here on Sunday, the steel industry urged the government that all decisions relating to the economuy must be taken strictly on merit instead of adopting policies aimed at appeasement of politicians. It is time we learn from past mistakes where economy related decisions were taken under political considerations. That approach did not work and destroyed the industry as well as the economy of the country. The results of such ill-conceived policies are quite evident as hardly any one is ready to invest here.
It said the tax holiday given to erstwhile Fata/Pata’s badly damaged the domestic industry during the last six years. It’s worth noting that some influentials from political and trade bodies have stakes in Fata/Pata as they own steel and ghee units and other industries in these areas. These elements are advocating for the perpetuation of Fata/ Pata tax exemptions, purely for personal gains and their vested interests; with no relief intended for the poor common man of Fata/Pata.
These exemptions granted to Fata/Pata were largely misused and the goods produced in the non-taxed areas were blatantly sold in rest of the country/taxed areas without the levy of Sales Tax, said the PALSP.
Massive misuse of tax exemption given to industry in Fata/Pata during the last six years wiped-out more than 50/60% industry in Gadoon Industrial Area, Hayatabad Industria Area, Hattar Industrial area as well industry in Islamabad and Punjab. This practice is not only destroying the steel (long, flat, round) & oil, ghee Industry and causing job losses but also the exchequer is facing huge revenue loss to the tune of hundreds of billions of rupees.
These exemptions were so badly misused that around 90% of the steel (long, flat & round) and 30% of ghee produced in Fata/Pata was being smuggled to the settled areas without payment of sales tax. Due to worst situation created for the local industry due to such ill-conceived policies, the Chinese have put the first private sector steel mill that was being established in Rashakai Special Economic Zone has been put on the halt. The second steel mill established by Chinese in Gadoon industrial state has already been shelved. ‘Through these mindless measures, what signal are we sending to the existing, as well as, any new investors,’it asked
Also, theses exemptions establish a dual discriminatory two-tier tax system in Pakistan where tax compliant industry is being overburdened to incentivize/ reward unregulated industry in Fata/Pata. It said the government must ensure to establish a fair and transparent tax system that applies uniformly across all regions of the country to save industry from permanent closure and to stop the ongoing assault against the tax-paying industries of the country.
PALSP appealed the government not to withdraw the amendment announced in the Finance Bill of a gradual reduction of Fata/Pata tax exemptions.
Copyright Business Recorder, 2024
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