RGST to hurt exports: industry
Tax refunds a major concern.
KARACHI:
The five sales tax-exempted sectors have said the government should not bring them under the reformed general sales tax (RGST) regime as it will hurt exports that have moved upwards over the last few months.
Speaking at a press conference on Monday, representatives of the five sectors including value-added textiles, sports goods, surgical items, leather goods and carpets - asked the government not to withdraw the 2005 sales tax regime.
They stressed that they are not against RGST but the main concern is the refunds system that the Federal Board of Revenue (FBR) wants to bring with the new tax structure.
“It is our opinion that the government will not be successful in releasing refunds to industries under the new system. How can they refund billions of rupees when they have been unsuccessful in the present system with fewer funds to refund?” asked Zubair Motiwala, Chairman of the Council of All Pakistan Textile Associations.
These sectors account for more than 80 per cent of the country’s exports, which will be hurt as small exporters will disappear from the scene. Under the RGST, more money of exporters will get stuck for months in refunds which will eventually reduce exports, they argued.
Motiwala said the benefits of the new textile policy, which is a big achievement of the government, will be nullified if the RGST is imposed on the zero-rated sectors. Bureaucrats will also mint money in different cases like flying invoices, over-invoicing, fraudulent companies and mis-declaration, they alleged.
Syed Usman Ali, Chairman Towel Manufacturers Association of Pakistan, said “we will protest if the RGST is imposed on us.”
Fawad Ejaz Khan, Chairman Pakistan Leather Garments Manufacturers and Exporters Association, said the government cannot successfully run with the RGST for more than three to four months because of fears that a number of fraud cases will occur and billions of rupees will get stuck in refunds. However, the government insists it will refund money in weeks.
Jawed Chinoy, Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), said the RGST will increase friction between taxpayers and tax collectors.
Khwaja Usman, Chairman Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association, said the RGST will directly hurt exports because 22 per cent money of exporters will be stuck with the government.
Sohail Yaqoob, Chairman Pakistan Sports Goods Manufacturers and Exporters Association, said the sport goods industry also disapproved of the RGST which is against exports. “The government should consult businessmen on the new tax structure,” he said while talking from Sialkot by phone.
Published in The Express Tribune, December 7th, 2010.
The five sales tax-exempted sectors have said the government should not bring them under the reformed general sales tax (RGST) regime as it will hurt exports that have moved upwards over the last few months.
Speaking at a press conference on Monday, representatives of the five sectors including value-added textiles, sports goods, surgical items, leather goods and carpets - asked the government not to withdraw the 2005 sales tax regime.
They stressed that they are not against RGST but the main concern is the refunds system that the Federal Board of Revenue (FBR) wants to bring with the new tax structure.
“It is our opinion that the government will not be successful in releasing refunds to industries under the new system. How can they refund billions of rupees when they have been unsuccessful in the present system with fewer funds to refund?” asked Zubair Motiwala, Chairman of the Council of All Pakistan Textile Associations.
These sectors account for more than 80 per cent of the country’s exports, which will be hurt as small exporters will disappear from the scene. Under the RGST, more money of exporters will get stuck for months in refunds which will eventually reduce exports, they argued.
Motiwala said the benefits of the new textile policy, which is a big achievement of the government, will be nullified if the RGST is imposed on the zero-rated sectors. Bureaucrats will also mint money in different cases like flying invoices, over-invoicing, fraudulent companies and mis-declaration, they alleged.
Syed Usman Ali, Chairman Towel Manufacturers Association of Pakistan, said “we will protest if the RGST is imposed on us.”
Fawad Ejaz Khan, Chairman Pakistan Leather Garments Manufacturers and Exporters Association, said the government cannot successfully run with the RGST for more than three to four months because of fears that a number of fraud cases will occur and billions of rupees will get stuck in refunds. However, the government insists it will refund money in weeks.
Jawed Chinoy, Chairman Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), said the RGST will increase friction between taxpayers and tax collectors.
Khwaja Usman, Chairman Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association, said the RGST will directly hurt exports because 22 per cent money of exporters will be stuck with the government.
Sohail Yaqoob, Chairman Pakistan Sports Goods Manufacturers and Exporters Association, said the sport goods industry also disapproved of the RGST which is against exports. “The government should consult businessmen on the new tax structure,” he said while talking from Sialkot by phone.
Published in The Express Tribune, December 7th, 2010.