Fiscal policies for the coming year should be oriented to support the export sectors as artificial props are tumbling down and fierce competition is heralding the survival of the fittest. Main thrust of the budgetary provisions should address the challenges faced by exports and economy.
Briefing the newsmen about PTEA's budget proposals here on Monday, Chairman Pakistan Textile Exporters Association Ajmal Farooq stressed for implementation of zero rating regime for export sectors in true sense. In finance bill 2016-17, exports were allowed zero rating; however at the time of implementation, zero rating on coal was allowed only on local purchase not on import, he elaborated.
Lauding the Prime Minister's Trade Enhancement Initiatives, he termed it a positive move of the towards exports promotion and demanded its continuation in next budget. "FBR should evolve mechanism for ending practical hassles, liquidity problems of refund claimants and frivolous litigation pertaining to refunds," he added. Pointing out the issue of subsequent recovery proceedings against blacklisting of supplier on a subsequent stage, he said it was principally agreed at different forums that status of the supplier at the time of transaction/supplies will be reckoned for initiation of recovery proceedings.
He stressed for amendment in Sales Tax Act and Sales Tax Rules and also in the relevant section 21, sub section (2). He said that locally produced machinery is liable to sales tax whereas import of machinery by manufacturers is included in the Eighth Schedule. This exemption should be withdrawn as the same is causing disparity vis-à-vis commercial importers/manufacturers of exempt goods/local manufacturers of machinery. He further added that at present capping of 90 percent of input tax against output tax has been imposed under section 8B of the Sales Tax Act, 1990 which is causing hardship and undue financial burden on the taxpayers and should be withdrawn.
Terming liquidity shortage as major hurdle in export growth, he said that extreme cash flow crunch had squeezed the financial streams and breading the liquidity jerks to the exporters as billions of rupees of textile exporters are stuck up in Sales Tax, Custom Rebate, Income Tax refund regime and textile policy incentives creating extreme liquidity crunch. He asked the Government to allocated necessary funds in coming budget for long payment of outstanding refunds of exporters.
Highlighting the high energy cost for Punjab industries, he said that textile industries in Punjab is still getting least amount of system gas though domestic demand has dipped significantly on rising temperature. While suggesting amendments in Punjab sales tax on services, he said textile exporters are engaged in export of goods and services received in this regard are used in exports. Since exports are zero-rated, therefore, there is no justification to collect sales tax from the export and to refund the same. He proposed that that rate of sales tax may kindly be rationalized to provide level playing field for service providers across the country as sales tax rate is different on same kind of services in other provinces. He further proposed that minimum threshold for registration may be assigned to minimize compliance cost of the small scale service providers.
PTEA Vice Chairman Muhammad Naeem was of the view that textile sector, an important segment of the national economy is under crisis and industrial production is not in accordance with the built up manufacturing capacity. Due to this underutilization, the country is not fetching the full potential of foreign exchange earnings. "There is need to enhance the industrial production to accelerate economic growth and generate vast opportunities of employment." He demanded that government should concentrate upon some truly visionary steps and address genuine concerns of the industry with innovation and bring extraordinary solutions in the upcoming budget.
Chairman All Pakistan Bedsheet & Upholstery Manufacturers Association (North Zone) declared high production cost as major setback to the industry and exports and said industry had been hitting hard by the soaring prices of supplies and ancillary goods. "Price hike in supply items is creating a chain effect of increases and ultimately placed a burden on cost of production of industrial goods making them uncompetitive," he contended. He demanded to provide inputs at competitive rates ensuring competitiveness edge within the region.