KARACHI: Johar Qandhari, President of the Korangi Association of Trade and Industry (KATI), has strongly condemned the government’s proposed fixed tax regime on exports, warning that it will severely impact exports and discourage both domestic and foreign investment.

Qandhari stated that this policy move would inflict serious damage on the economy and further complicate the challenges faced by industrialists. “The government’s proposal to implement a fixed tax regime on exports will only add to the difficulties of industrialists, rather than facilitating them to boost exports,” he said. “The cost of production has already reached unprecedented levels due to various government policies, including high taxes and regulatory duties.”

He highlighted that the current tax burden on industries— comprising income tax, sales tax, withholding tax, and regulatory duties— can account for up to 50% of their income. This, he argued, makes it virtually impossible for industries to operate profitably. “No industry can sustain itself with a 50% tax on income. It is becoming increasingly difficult to run industrial operations under these conditions,” Qandhari added.

He expressed concern that such government actions could halt foreign investment entirely and lead to the closure of existing industries. In contrast, neighbouring countries like India and Bangladesh provide extensive support to their exporters, including ministerial assistance and special protocols, which enhances their industrial growth and global market presence by enabling them to offer competitively priced products.

“In Pakistan, exporters are being treated as adversaries, stripping them of their right to conduct business,” Qandhari remarked. “Rather than expanding the tax net to increase revenue, the government is unfairly burdening the existing taxpayers.”

He called for immediate reductions in electricity and gas prices, along with the withdrawal of the proposed fixed tax regime on the export sector, to facilitate increased domestic exports. “The government must take urgent steps to support exporters and promote industrialization to prevent economic decline,” he emphasised.

Copyright Business Recorder, 2024