The Federal Board of Revenue (FBR) has dropped a major budgetary proposal pertaining to education system. The proposal sought to restore sales tax zero-rating on stationery items having revenue implications of Rs 700 million. Industry sources told Business Recorder here on Saturday that restoration of sales tax zero-rating on stationery was very much on the cards but perhaps due to an unknown reason the same could not be included in the Budget 2017-18.
The association of local stationery manufacturers is hopeful that the anomaly would be rectified before the passage of the budget from the Parliament. Industry is surprised that the relief measures of sales tax and FED have been calculated at Rs 18.735 billion. The net impact of the sales tax and FED measures for next fiscal year has been worked out at Rs 33.86 billion for 2017-18. If the FBR has given relief to poultry, hybrid electric vehicles, agriculture diesel engine/imported seeds for sowing, items for renewable sources of energy/ conservation of energy and multimedia projectors and many other sectors, why the facility for the educational stationery items has not been incorporated in coming budget (2017-18).
Moreover, the proposal to restore sales tax "zero-rating" on educational stationery items is directly linked with the education sector. It is not clear how the authority rejected the proposal relating to the educational system of Pakistan. The industry said that the anomaly on educational stationery remains, if sales tax zero-rating not restored, a great hardship for education seekers, a bane for local stationery manufacturers.
The Finance Act 2016 abolished sales tax "zero-rating" on essential educational requisites as pencils, pens, exercise books, rubber erasers, pencil sharpeners, marking pens etc, thereby disallowing adjustment of sales tax paid on industrial inputs. The sales tax anomaly thus created has resulted in drastic increase in retail prices of educational requisites by 35 to 50%; significant increase in the burden on common man and poor education seekers; nullifying the government's noble resolve to provide "education-to-all;" undermining Prime Minister's declaration of "National Education Emergency for Eradication of Illiteracy" and rendering the local industry unviable against imports, with a loss of 22,000 jobs for Pakistani workers.
While there may be two opinions with regard to the burdening of other sectors, the rationale behind taxing primary items such as pencils, pens, inks, erasers, exercise books etc, used by education seekers is just not understandable. PML-N's own Vision 2025 and its education manifesto call for declaring "National Education Emergency for eradication of illiteracy on a war-footing basis." There is one danger to the realisation of the government's vision, ie education and its requisites being taken out of the reach of poor masses through slipshod fiscal anomalies that remain intact.
The entire nation is unanimous on this issue. The finance committees of both the houses in Senate and National Assembly, parliamentarians from both treasury and opposition benches, ministries of education, industries & production, Federation of Pakistan Chambers of Commerce and Industry, Employers Federation of Pakistan and Engineering Development Board have all strongly recommended that basic educational requisites must be set free from any kind of (input or output) tax levy, they added.
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