All Pakistan Paper Merchants Association (APPMA) has proposed tat the sales tax should be reduced to single digit of 9 percent without allowing any refund or rebate. In its federal budget proposal for the year 2019-20, the association notes that excessive high sales tax generates hateful business practices in the form of under-invoicing and/or getting rebate/ refund, contributing to undocumented economy.
Since highest withholding tax (WHT) generates corruption and causative to undocumented economy, APPMA suggested that WHT must slash to 3 percent for both commercial and industrial concern without allowing any refund or rebate. It fur6her noted that there is big tax disparity between individuals, AOP non-corporate and corporate sectors with non corporate sectors are heavily taxed as compared to corporate sectors.
The association recommended changes in the Income Tax Ordinance Rules 2001 seeking to amend the tax rate u/s 148 and 153 and 235 to make it equally acceptable to non-corporate sectors. It stated that the association confirms that government would get surplus revenue if the latter disallows irregular tariff between commercial and industrial units or at least decrease it because unbalanced tariff simply support undesirable/ undocumented economy.
It cited that commercial importers are the principal goods provider to industries due to huge irregular/unfair tariff between commercial importers and industrial concern while mushroom growth industries emerged, wholly supplying goods into local markets.
It requested Ministry of Commerce to look into loads of complains and proposals from All Pakistan Paper Merchants Association and PAPGAI to revise irregular tariff and anomalies and rationalise tariff in order to reduce cost of production of local industries. It said local paper industries are over protected due to imposition of huge customs, regulatory, anti-dumping duties and other taxes. Paper industries instead of supporting economy by exporting paper are to blame for losses by selling locally at higher prices.
It urged that ministry of commerce must analyse and check out 17 percent sales tax paid by local paper industries that has over 90 percent market shares estimate against sales tax of 10 percent imported paper. It asserted that 100 percent over protected industries are major factor of losses to economy.
The association further said that paper and paperboard is primary material of education and packaging industries which need greatest government sincerity for promotion of cheap availability of books, copies and other printed material so that education must flourish in our country, boost exports, our reliance on imported finished goods would lessen, generate skilful employments easily.
The APPMA lamented that it has been submitting budget proposals regularly for the past 15 years but without any use. It said their submission had been concerned with the condition of the printing industry and exports of printing and packaging materials which suffered to the brink of destruction owing to continuation of the highest customs duty and unbalanced/anomalous tariffs.
Printed materials (finished goods), such as books, catalogues, printed and packaging materials, literary materials, labels, pharmaceutical leaflets etc, are imported at tiny customs duty, whereas the imported paper and paperboard in jumbo rolls and large sheets the basic raw material of printing industry is levied with the highest rate of customs duty to make local printing industry exceptionally subside.
It stated that other unbalanced/anomalous import tax exists on paper as there is no duty on basis of raw materials i.e. pulp (H.S Code 4705) and negligible duty on finished goods such as printed books, literary materials; however, in semi-finished goods (raw material) i.e. paper and paperboard (HS Code 48) there is 56pc to 63pc combined duty, regulatory duty, anti-dumping duty and other taxes add-on.
The association noted that H.S Code Chapter 4801 declares paper as 'raw material' but government treats paper (raw material) as luxury goods and charge customs duty, RD/ other taxes totalling 56pc to 63pc, anomalous tariffs, and anti-dumping duties ignoring the fact local industry make quite very few types of paper and they largely depend on fine quality imported papers.
It said other regional countries have managed to set up equally well-organised printing units in their countries and in Pakistan it led to increasing imports of books from Malaysia, Singapore, Indonesia, UAE and China, prescribed in Pakistan's educational institutes, which were once printed locally.
It said the cost of production of our printing industry is the lowest as compared to other countries but the highest customs/regulatory duty and additional taxes deny access to export of book, printed/packaging materials, label and we cannot even strive to export to Afghanistan.
The dilemma of the situation is the fact once we had been exporter of printed materials, wedding and visiting cards, Holy Quran, educational books etc, to UAE and other countries but now we import instead of export.
The association noted that Pakistan with the lowest literacy rate, keep the highest rate of duties and taxes on paper and paperboard (raw material). Further it's not look reasonable for the government to charge sales tax on education purpose goods. The association proposed 5 percent uniform customs duty for semi-finished raw material paper and paper board.