LAHORE - Any increase in sales tax in the upcoming federal budget will not be acceptable to the industry and any other formula falling short of zero rating will be totally rejected. Zero rating system operated well in the past but was not affordable to ‘corrupt mafia’ in the FBR. The corrupt FBR mafia in collaboration with fraud companies managed to get illegal refunds while legitimate claimants remained deprived of their rights for years.

These views were expressed by Shahzad Azam Khan, chairman of Pakistan Knitwear and Sweaters Exporters Association, Sajid Saleem Minhas, former chairman of Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA), and Abdul Hameed, vice chairman of Pakistan Hosiery Manufacturers and Exporters Association (PHMA) at a joint press conference of five export sectors here at a local hotel on Friday. A large number of industrialists were present in the press conference.

Shahzad Azam Khan said that apparel sector exports are on the decline as compared to previous year, whereas the exports of our competing countries like Bangladesh and Vietnam are growing by 10%. “Our declining exports pose direct negative impact not only on foreign exchange earnings but also on employment of labour,” he pointed out.

This is alarming situation for the economy but the government is turning a blind eye to ground reality and is not prepared to listen to our woes, he regretted. He further said that similar is the situation for surgical instruments, leather goods, sports goods and gloves exporters.

“The hostile winds have already decreased the profitability of industry and are leading not only to closure of industrial units but also massive labour lay offs. If favorable business environments are created, we do have capacity and capability to grow same way as our competitors are growing,” he said.

Shahzad Azam Khan reminded the Prime Minister of his promise of 13th February when he announced zero rating for export sectors w.e.f 1st July 2016, adding that the government seems to be backing out from his words. Prime minister had announced in London that gas and electricity will be supplied to industry regularly but the ground realities do not match with his statement, he claimed.

PRGMEA former chairman Sajid Saleem Minhas said that the apparel export sector consists of mostly SMEs while only few large scale companies are in this filed. “Our huge amounts are held up with the government in the shape of sales tax refunds, custom duty rebates, DLTL claims etc. As much as Rs 350 billion of export sectors are held up, creating liquidity crunch for the industry. To add to our miseries, government seems to be set to increase the rate of Sales Tax and withdraw exemption from withholding tax on power bills instead of broadening tax base. This cruel act will lead to further closure of industry and job lay offs,” he said.

Sajid Minhas said that it is matter of grave concern that exports of country are continuously decreasing but the government seems to have no concern with the deteriorating state of economy. Textile being backbone of economy is under heavy pressure, particularly the value added apparel sector is shrinking.

PHMA VC Abdul Hameed reminded: In the budget 2015-16 speech, Finance Minister Ishaq Dar announced that all the Sales Tax Refunds claims would be cleared by 30th September and that all admissible refund claims of exporters shall be disposed off maximum in 3 months. Where has that promise gone?” he asked.