Carpet manufacturers have cautioned the government that if exporters are included in the normal tax regime, as per budget proposals, all exporters will be forced to shut down their businesses.
While expressing concern during a visit to the Lahore Chamber of Commerce and Industry (LCCI) on Tuesday, members of the Pakistan Carpet Manufacturers and Exporters Association, led by Shahid Hassan Sheikh, stated that instead of providing facilities to the export sector, the government had added to their difficulties.
Placing exporters in the normal tax regime would push down their revenue and slow down dollar inflows into the country, which would lead to a further increase in inflation, they said. The association warned that the exporters of Pakistan might relocate to countries like the UAE, which were offering Special Economic Zones with business-friendly policies.
They demanded the crafting of export-friendly policies and the announcement of a five-year export policy, which should not be impacted by future budgets.
The government’s financing facility for exporters has moved from 3% to 19%, which is termed unviable. Additionally, other facilities like the Duty Drawback of Local Taxes and Levies and the incremental DLTL have been withdrawn and the amount due for the past four years has not been paid yet.
“Now, the fixed tax facility will be withdrawn, which is totally unacceptable and unfair,” an association member remarked. The association members called for a review of agreements with the IPPs to reduce electricity costs, a reduction in gas prices and the restoration of other export subsidies. Speaking on the occasion, LCCI President Kashif Anwar noted that in the past three years Pakistan had witnessed massive currency devaluation, and with the rise in energy tariffs, input costs had also gone up.
Despite those challenges, he said, the government’s policies and the hard work of exporters helped take Pakistan’s exports to $30 billion. “However, withdrawal of the facilities provided to exporters will now lead to a decrease in export volumes.” The LCCI chief expressed hope that the issue would be resolved soon and clarified that they were not against taxing exporters, but the longstanding tax regime should not be changed overnight.
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