Business community expressed deep concern over indication that the government contemplating to increase Sales Tax (ST) rate on textile and leather industries from two percent to 5 percent in the first phase and 17 percent in next three years. They are opposing increase in the rate of sales tax and said the cost of doing business in Pakistan is going up day by day and Pakistani exporters are not getting a level playing field and may fail to get desired benefit of GSP Plus status.
They emphasised that the prices of utility should be reduced at lest for export industries, and should be capped for a period of at least two years, so that the manufacturers and exporters could quote the price to its customers, which should be valid for time period of minimum one year. They urged Prime Minister of Pakistan, Mian Muhammad Nawaz Sharif, Commerce Minister Engr. Khurram Dastgir Khan Sahib and Chairman FBR Tariq Bajwa to take immediate notice and early announcement for the "Withdrawal" of proposed increased of Sales Tax up to 17 percent in the supreme interest of leather and textile industries and save from further financial suffering of the Industry as well.
Chairman, Pakistan Tanners' Association (PTA), Sheikh Saqib Saeed Masood expressed his deep concern on news appeared recently in print media that the Government is considering to increase Sales Tax from existing two percent to exorbitant extent up to 17 percent, while this 2nd biggest export oriented Industry is already in the severe clutches of survival in lack of basic facilities as persistently demanded from the Government for providing level playing field to the Industry. He strongly opposed the proposed move of the Government for irrational increase of Sales Tax up to 17% under the prevailing business circumstances within the country, which would definitely bring negative repercussions/impact in the following forms:
01. To Stuck up huge working capital of Leather Sector in the sales tax regime, while reimbursement process is unfortunately quite slow.
02. As a result, the export/working capacity of Tanners would certainly be shrunk/ curtailed to the alarming extent.
03. Pace of Export of Leather Sector would also certainly be slowed down, which would certainly be repugnant to the aspiration of the Prime Minister of Pakistan Mian Muhammad Nawaz Sharif to promote the country's exports.
04. Further unemployment era would also be opened from Leather Sector, as presently One Million people (approx) are consumed in Leather Sector directly or indirectly.
05. Production cost would also be increased to render in-competitive in the international market, which is already on higher side and our member exporters are already perturbed severely to the selling end of finished leather/products duly value-added in comparison with neighbour competitors. Sheikh Saqib Saeed Masood strongly emphasised the need in the best interest to facilitate this 2nd biggest export sector of the country to avoid consideration/contemplation for proposed increase of Sales Tax up to 17 percent, which would be termed fatal and completely un-acceptable by Leather Sector.
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