Businessmen slam flood surcharge, withdrawal of tax exemptions

Industrialists and businesspersons reject flood surcharge and ordinances that withdrew sales tax exemptions.

KARACHI:

Industrialists and businesspersons have rejected the flood surcharge and ordinances that withdrew sales tax exemptions on export-based industries, however, experts say the government had to take the decision in any case.

Industrialists urged the government to take back its decision and threatened protest against the move if it did not pay heed to their demands. They said that the government has imposed reformed general sales tax (RGST) in a different garb.

SITE Association of Industry’s former chairman Nisar Shekhani said that industrialists from different sectors met on Wednesday to discuss the situation after the issuance of different ordinances.

“We have decided that we will oppose these ordinances. We have to shut down our factories, because the government is imposing RGST in a different packaging,” he said.

The government has withdrawn tax exemptions on machinery import, which will hamper industrial growth, he added. This would mean the levy of 17 per cent GST on purchase of machinery and domestic sales of export-oriented items like textiles, leather, carpets, sports goods and surgical instruments.

Commenting on the ordinances, he said the chairman of the Federal Board of Revenue is coming to Karachi to meet the business community and discuss these ordinances, but “in any case the ordinances are a bombshell for the business community.”

A F Ferguson & Co Partner Syed Shabbar Zaidi said, “technically speaking, the issuance of ordinances is like bringing RGST regime in the country.” The era of zero-rated export industry is over and now the five zero-rated industries will come under the sales tax regime, he explained.

Speaking on exemptions for the agriculture sector, he said the government has also withdrawn tax exemptions on fertiliser and tractor manufacturers. However, Zaidi disagreed with the government on flood surcharge.

“This means if you currently pay Rs1,000 in income tax, you will have to pay 15 per cent of Rs1,000, that is Rs150 additionally. “The 15 per cent flood surcharge on taxable income is unjust, it was not required,” he said.

The Faisalabad Chamber of Commerce and Industry (FCCI) on Wednesday called a meeting which was attended by office-bearers of 20 local trade bodies and members of FCCI, who expressed their resentment over the taxation measures taken by the government.

The participants said that economy was already facing difficult times for the last few years and government policies have failed in giving structural support to the economy after the international financial crisis.

They demanded that the government immediately withdraw the presidential ordinances and instead move bills on these issues in the National Assembly for open discussions by parliamentarians.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) also demanded immediate withdrawal of the flood surcharge and a two per cent increase in electricity tariffs.

Talking to the media, vice presidents of FPCCI said that the burden of taxes on trade and industry will affect the national economy. They also called for measures to control smuggling of Afghan transit goods, which is a great loss to the national exchequer.

Published in The Express Tribune, March 17^th, 2011.