Opposing the FBR plan to withdraw Sales Tax Zero-Rating from certain export items on the excuse of generating more revenue Pakistan Tanners Association (PTA) on Friday said that thoughtless decision would adversely affect exports at a time when huge amount of Sales Tax Refunds are already stuck up with the FBR and exporters are facing liquidity crunch.
While talking to Business Recorder, the Pakistan Tanners Association (PTA) Central Chairman Agha Saiddain said the government may study export policies of India, China and Bangladesh where exporters are facilitated through export friendly policies he said and added that FBR should announce export friendly policies instead of creating difficulties for the industry.
Agha Saiddain said that Pakistan leather products export volume can be escalated to $3 billion from existing worth of about $1.048 billion if government takes all stakeholders on board and finalise export policies with their consultations. He asked the authorities to take representatives of export-oriented industries on board for evolving an effective and result-oriented trade and export policies that could help achieve desire goal of increasing exports.
The PTA Central Chairman warned the FBR Chairman against revision of Zero-Rating scheme keeping in mind the existing huge trade gap of US $21.271 billion during 2011-12, as Pakistan total exports stood at US $23.641 billion against the total imports of US $44.912 billion.
"This huge trade gap has resulted in inflation and devaluation of Pak Rupee. If zero-rating from five sectors i.e. textile leather carpets sports and surgical is withdrawn, it will adversely affect our exports" he said and added that huge amount of Sales Tax Refunds are stuck up with FBR while exporters are already in liquidity crunch. Withdrawal of Zero-Rating will further add insult into the injury, he added. He gave an example of leather sector in South Asia where China India and Bangladesh recorded growth rate of 47 percent, 40 percent, and 71 percent, respectively in last five years contrary to Pakistan where leather sector's exports were declined by 14 percent.
Agha Saiddain further said that that Indian Commerce Minister issued a statement that India would export goods not taxes. He said export items must shed all duties and taxes within India before these are exported. While comparing with India, he said that duty draw back rates in India are 6 percent, 9.2 percent, 9.8 percent and 7.7 percent for finished leather, leather footwear leather garment and leather gloves respectively as against the duty drawback of 0.82 percent, 1.82 percent, 4.26 percent and 1.54 percent respectively, in Pakistan. He further said that how the duty drab back could be higher in India where most of the inputs including chemicals are indigenous. He stressed for export friendly policies for arresting capital flight and saving of local industry.