FAISALABAD-  The Pakistan Textile Exporters Association has strongly opposed the proposed increase in sales tax and changes in tax regime, saying the proposal will negatively impact the textile exports and other industrial activities.

PTEA Chairman Sheikh Ilyas Mahmood and Vice-Chairman Adil Tahir said that the move would adversely affect exports at a time when huge amount of sales tax refunds were already stuck up with the FBR and the exporters were facing liquidity crunch. The move would add fuel to the fire, they said and added that textile export sector had already been reeling under severe energy shortage, hike in tariffs, squeezed industrial activities and high cost of production.

“There will be no level playing-field to honest taxpayers instead it would only result in blockade of their capital in the shape of refunds, increase cost of doing business and shrink export turnover. In the prevailing economic condition, rising cost of production is the core issue for textile exporters and the increase in sales tax would have a negative impact on national economy and exports. FBR should make efforts to bring the retail and untaxed sector into the tax net to enhance its revenue collection, instead of further taxing the ailing textile sector,” they said.

Sheikh Ilyas was of the view that Pakistan was losing its ground and competitiveness against regional countries like China, India, Bangladesh, and Sri Lanka. Export sector must be facilitated to earn foreign exchange for the country and it should not be used for revenue collection as is done all over the world, he said.

 The FBR should evolve export-friendly policies as with increased exports they can raise revenue and the country will also get foreign exchange and people will get employment, he said. “The FBR is not taking stakeholders on board and instead of widening tax net adopted traditional way to squeeze existing tax payers. Any move to add taxes to export sector would be a detrimental to the economy,” he added.

The vice chairman said that at a time when textile industry needed export friendly-policies and conducive to business environment to reap maximum benefits of GSP plus status, such initiatives will retard the economic growth. He said that on one hand, billions of rupees of exporters were stuck up with FBR in different refund regimes and on the other hand FBR is putting more burdens of tax on the taxpayers.

They urged the government to drop the proposal for increase in sales tax and demanded zero rating scheme in the better interest of the industry. This would help to increase country’s exports and also attracts the industrial investment, they concluded.