The Pakistan Sports Goods Manufacturers and Exporters Association (PSGMEA) and the Multan Chamber of Commerce & Industry urged the Federal Board of Revenue (FBR) not to impose new taxes nor increase the existing ones on the already hard pressed tax-payers and concentrate on the issues which are hampering trade and economic activities.

The PSGMEA expressed grave concern over FBR’s plan to increase the sales tax on five export sectors from 2 percent to 5 percent. PSGMEA Chairman Rana Naseer Ahmed stated this while addressing a meeting of the sports goods manufacturers and exporters held at PSGMEA auditorium.

He said that proposed levy of 5 percent sales tax on the exports of textile, surgical, carpet, sports and leather sectors will have destructive effect on the export. It would add to the woes of the exporters and the industries. He added the 3 percent proposed increase would not be acceptable for the exporters as it will crush the exports.

He said that these decisions should not be taken in the offices, and the government should take business community on board. He further added that the export sector is further burdened with high power and gas tariffs, which have made it very hard and difficult for the exporters to compete in the international markets. The planned increase of sales tax would further enhance the grievances of SME’s.

He added that on the one hand, the government encouraged the export industry to boost up the foreign exchange but on the other hand, the FBR was planning such unpleasant steps which would not only affect the efficiency but also let down the morale of business community. The government, he demanded, should make business friendly policies, so that the business community could focus on the increase of exports which would ultimately result in the progress of the country, he said.

Likewise, MCCI President Mian Iqbal Hassan said that FBR has failed to broaden tax net despite big claims in this regard. Government agencies like FBR should act as facilitator for the business community. He said FBR is using all tactics for revenue generation but not broadening the tax net that is the only solution to the shortfall in revenue target. He said that reportedly, 855,429 taxpayers have filed income tax returns for the year ended June 30, 2014. He added that 322,438 taxpayers paid zero tax; 260,888 paid less than Rs20,000; 240,072 paid from Rs20,000-999,999; 17,477 paid from Rs1 million-2.5 million; 7,237 paid from Rs2.5 million-5 million; 3,817 paid from Rs5 million-10 million; while 3,500 paid Rs10 million and above.Mian Iqbal Hassan said that these statistics show a really dismal state of affairs in FBR which has not been able to add any new taxpayers notwithstanding the fact that it claims to have complete data of 3 million plus persons having taxable income.

He said that the net annual collection of FBR from textile sector by maximum is Rs10 billion. The current rate of sales tax on textile goods varies from 2%-5%. With these rates the stuck-up amount of refund cases of textile sector is stated to be over Rs100 billion. If FBR increases the sales tax rate, the stuck-up refunds will multiply further choking the working capital of the textile sector.