ISLAMABAD-The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has termed the FBR as the biggest hurdle in the way of industrialisation, as the tax agency, instead of promoting the industry, tries best to discourage the manufacturing sector and export, collecting more than 51 percent tax revenue from manufacturing sector, with just 13 percent share in GDP, but the agri sector, which constitutes more than 26 percent of the GDP, contributes mere 2 percent of the tax income in the country.
PRGMEA Central Chairman Mubashar Naseer Butt suggested the government to disband the Federal Board of Revenue (FBR), as this tax department, having a burden of more than 23,000 employees, does nothing for the benefit of national economy or industrialisation, since whole tax collection is made indirectly through sales tax or withholding tax by the industry.
The FBR, instead of facilitating the industry, which helps it to collect tax revenue through withholding taxes, creates problems for manufacturers as well as the exporters, he added. He said the commitment of the FBR to instantly release exporters’ tax refund claims through FASTER System seems to be just an eyewash, as the tax collectors, instead of releasing timely refunds, have started sending audit notices to the exporters to refrain them from demanding their own payment. He maintained that on average 10 audit notices are being served to almost every exporter, who presently needs payment but fed up over the long delays of their refunds. The NAB was established for politicians and the FBR has been formed just to harass the industry, he said and added that we cannot convince our children to expand the industry, as the contributor of 51 percent tax share in Pakistan has been considered as tax evader and thieves.
Punjab Governor urges to bring children suffering from autism into social circles
PRGMEA Vice Chairman Waseem Akhtar observed that the value-added textile exporters are facing severe liquidity crunch and they need the refunds payment in time. It’s a question of survival amidst acute liquidity crunch and we need the help of the government to save the industry from bankruptcy by releasing its refunds, he appealed. Waseem Akhtar said that the PRGMEA has been approached by various members informing that they have been facing inconvenience owing to delay in refunds payment despite the fact that their refund payment orders (RPOs) were generated as well as approved. Waseem Akhtar also called for ease of doing business, lowering cost of production, solution of liquidity crunch through early refunds payment, long-term and consistent energy tariff policy and relaxed import policy for industrial raw materials so that industrialisation could be promoted and exports could be enhanced.
He noted that that the situation has worsened due to continued political unrest, import restrictions, and an unchecked dollar increase. These factors have increased inflation, undermined the rupee, driven up yarn prices, driven up the cost of electricity per unit, and, most importantly, harmed business confidence, he added.
Imran Khan responsible for ‘economic, political & constitutional crises’: Marriyum
He shown his concern over the cancellation of competitive power tariff of 9 cents per KWH for the value-added textile export sector, expressing fears that discontinuation of the facility will hurt the economy. PRGMEA vice chairman said that the cancellation of the regionally competitive power tariff will lead to further decline in textile and the total national exports, terming the withdrawal as very alarming and unfortunate to have a disastrous impact on the cost of manufacturing of goods meant for exports. He said that the existing manufacturing cost is already higher in Pakistan as compared to the competing countries, as the Pakistani exporters’ deals fetch a very narrow margin of 2 to 3 percent. PRGMEA Central Chairman Mubashar Naseer Butt maintained that Pakistan’s current economic crisis did not happen overnight. In fact, careless and poor policies over decades have brought the country to the brink of default. The country’s persistent twin deficits have driven it to a juncture where it cannot even pay for vital imports like fuel, medicines, and food without relying on IMF bailout packages, or loans.
Coalition parties demand holding of general polls on single day across Pakistan
While Pakistan needs to widen its tax base to improve collection, it also needs to make the tax burden more equitable across sectors. Presently, Pakistan overburdens its manufacturing sector with taxes, while agriculture and services are taxed at low levels. The agriculture sector enjoys virtually zero taxes. While agriculture had a 26 percent GDP share, its contribution to the tax net was documented as only 2 percent. This skewed tax burden on the manufacturing sector has discouraged the growth of the manufacturing industry required urgently by Pakistan. Not only has this policy of uneven taxation across sectors prevented higher tax collection from certain sectors within the economy, but it has also discouraged industrial growth.