The value-added textile sector has resented at the federal government's expected move to slap five percent sales tax on export, saying the heavy taxation will prove fatal to the export-manufacturing sector. Talking to Business Recorder here on Friday, Pakistan Apparel Forum (PAF) Chairman Muhammad Javed Bilwani feared the government's consideration for imposing sales tax by two to five percent is a negative economic approach.
"Increase in sales tax on exports from two percent to five percent will surely be one more nail in the coffin of exports of our nation," he said, adding that "the value-added textile exporters are financially subdued from growing power, gas and water tariffs". He said the government instead improving supplies of utilities to the industrial units, it was planning to increase sales tax to put the manufacturing sector to another financial disaster.
"The soaring tariffs of electricity, gas and other essential raw materials are leading to high cost of business in Pakistan further hardening the competition against competing countries," he said, adding that the exporters are struggling to retrieve their bogged down amount of Rs 15 billion under DLTL claims for the last three years.
"A huge amount of financially subdued exporters is blocked in sales tax refund claims amounting to billions of rupees; customs rebate claims of billions of rupees and Rs 15 billion of DLTL claims which are held up by the government since an abnormally long period of time," he showed his concerns.
Bilwani said the value-added textile export sector continued to demand for abolishment of sales tax on export-oriented sectors. He said the abolishment of faulty tax system will help improve finances for exporters and the national treasury. "We [exporters] want 'no payment, no refund regime'," he said.
Despite 10 percent appreciation of rupee, the government increased tariffs for all basic utilities for industrial units, he said, adding that "the government is not extending relief to the export-oriented manufacturing units". He criticised the government for its policy of placing sales tax on small and medium sized export-oriented units. "It is cruelty," he added.
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