FAISALABAD: Asia’s largest yarn market in Faisalabad was shut down on Tuesday, protesting against the government’s decision to charge 0.6% withholding tax on every banking transaction valued at over Rs50,000.
Most markets in Faisalabad, the country’s third largest city, remained closed as part of a campaign to lodge their protest on the government’s decision and urge it to withdraw the recently-imposed tax.
The Pakistan Textile Exporter Association (PTEA) also took part in the campaign.
The association complained that sales tax officials were harassing them by exploiting Sections 38 and 40-B of Sales Tax Act. These sections authorised the Federal Board of Revenue (FBR) to have access to manufacturing premises and appoint officials to monitor production lines.
“The imposition is a highly irrational move as the banking sector transaction is already documented and the purpose of this tax is not to broaden the tax net, but to actually extract extra money from those already contributing to the national kitty, “said Council of Looms Owners Association Chairman Waheed Khaliq Ramay.
“The gray cloth buyers are purchasing cloth from loom owners on a credit basis and are giving post-dated cheques; on top of all this the government wants to charge 0.6% from this amount. It’s highly unfair,” said Ramay.
The businessmen also pointed out that the industrial sector will also suffer as suppliers would now demand cash payments. They said the increase in cash transactions would result in sales tax revenue going down, while also affecting the sector’s documentation.
The officials added that people would now resort to methods to help them evade taxes, defeating the very purpose of the government’s measure.
The businessmen also threatened that if the government did not withdraw the tax, they would be forced to use non-banking channels. They also warned of a similar protest in other cities if the government took no action.
The government has today (Wednesday) called a meeting of the business community leaders in Islamabad to listen to their grievances. However, the business community leaders said they were not optimistic as Finance Minister Ishaq Dar and FBR Tariq Bajwa had earlier refused to accept their demands.
Published in The Express Tribune, July 8th, 2015.
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