LAHORE - Pakistan Association of Automotive Parts Accessories Manufacturers former Chairman Muhammad Saleem has said that following the implementation of GST on tractors, the sale of tractors has slumped tremendously to 500 tractors a month from the average 7,000 tractors per month. So the FBRs claim of generating revenue by imposing GST on tractors has had quite opposite effect. He said that due to the wrong policy of the government more than 300 industrial units have been closed, forcing thousands of people to lose their jobs. He said that high tax rates on tractors sale would not only strengthen black economy but it would also lead to corrupt practices in the country. He asked the FBR to investigate as to how much revenue has been increased after the implementation of GST on tractor industry. The PAAPAM former chairman, talking to The Nation, said that the vendors association has also written to the Prime Minister regarding the closure of the tractor industry due to 16 percent GST implementation. The government without taking the industry on-board, decided unilaterally to impose 16 percent GST on the tractor industry effective 15 March 2011. This resulted in the immediate increase in the price of the tractor by 100,000 to 200,000, for the customer which is mainly the farmer of this country. Resultantly the tractor sales collapsed forcing the assemblers i.e, Millat Tractors and Al Ghazi tractors to close down their respective assembly plants. This has resulted in the closure of over 300 vendor based industry, leaving thousands of skilled workforce redundant and today the industry is at stand still. Exports to Afghanistan and other countries which is 15 percent of total production has stopped as the Pakistani tractor has become uncompetitive. 20 percent work force has already been made redundant by the vendors. All schedules have been cancelled by the assemblers till further notice. 4000 unsold tractors are standing with the tractor dealers across the country. 3000 sold tractors are parked at the assembly plants awaiting collection by customers who are not coming to collect their purchased goods awaiting Government decision on GST. He said that manufacturers feel that the GST regime should be enforced in a more gradual form so that the interests of the farmer, assembler and vendor can be watched and the FBR can also increase the tax contribution from the agri sector which is the largest sector of our economy. Today the tractor industry is making its presence felt in the international market, and if the growth of the past few years continues we are close to reaching the 100,000 units annual production mark. The tractor industry is undoubtedly one of the great success stories of Pakistans industrial progress, and the right policies can surely take it to greater heights. He said that PAAPAM represents over 300 strong Auto parts manufacturers, supplying parts to various cars, trucks, buses, tractors, motorcycles and rickshaw assemblers operating in the country. This vendor industry supports over 300,000 employees and provides businesses to over 1000 downstream suppliers which include steel mills, refineries, steel cottage industry, tool suppliers, and various other service providers. He said that these businesses are all registered tax payers and have contributed billions of Rupees in the form of taxes to the national treasury, and also generate employment opportunities for skilled workforce. These are the same industries which are the major contributors of engineering exports from Pakistan, and the back bone of the private sector defense industry. He said that the largest percentage of PAAPAM members come from the tractor sector, and it is the tractor sector which has the highest level of localization (over 95 percent) among the various assemblers operating in Pakistan. This sector is also the single most major consumer of cast, forged and machined metals. Meanwhile, the Lahore Chamber of Commerce and Industry has said that imposition of 16 per cent General Sales Tax and decision to allow import will not only ruin tractor industry but it would also have fatal repercussions on the Agri economy and engineering industry. In a statement issued here Wednesday, the LCCI President Shahzad Ali Malik, Senior Vice President Sheikh Mohammad Arshad and Vice President Sohail Azhar said that the imposition of 16 per cent General Sales Tax on tractors has resulted in the closure of tractor plants. No industry in Pakistan has remained closed for such a long period but the irony of the situation is that it has been created by the Government itself and neither any remedy is in sight nor government showing any signs of concern. The government on the pretext of bringing agri income under tax net and increase the Tax to GDP ratio imposed 16 percent GST on tractors. He said that in India GST on tractors is 4-5 percent. Europe levies a tax of 8 percent and in other countries around the world, the rate of tax on agri inputs is generally lower or these inputs are subsidized.