Addressing a press conference on Saturday at the Pakistan Hosiery Manufacturers Association House, Karachi, where chairmen of 16 textile associations were present, Motiwala said that the intention of the government to withdraw zero-rated sales tax facility and implementation of value added tax (VAT) would be a step backward and ruin the textile sector.
He added that VAT regime will certainly break the backbone of the economy, which is the textile sector. “Today the textile sector is undergoing the worst ever crisis with yarn prices doubling and cost of doing business rising.”
He said: “If we calculate exports at $10 billion, the cost of raw material will come to $5 billion. With a 15 per cent sales tax, the government will generate $750 million which will be held up with the government as interest-free liquidity and loan of exporters.” Praising Foreign Minister Shah Mehmood Qureshi for winning duty-free market access to the EU, he said that all this would go in vain with the withdrawal of zero-rated export facility.
Jawed Bilwani, coordinator CAPTA, suggested that the government should charge sales tax on retail sales which is not paid back and exempt manufacturers-cum-exporters.
Published in The Express Tribune, September 19th, 2010.
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