LAHORE: The government’s decision to reduce sales tax from 2% to 1% on raw material supplies for five export industries, during the approval of budgetary proposals for 2017-18 by the National Assembly, was positively received by the Pakistan Hosiery Manufacturers and Exporters Association (PHMA).
However, its Chairman Adil Butt expressed concern over the meagre allocation of funds for the duty drawback claims of exporters under the prime minister’s export package. So far, only Rs4 billion has been released for the exporters against total claims of over Rs24 billion.
“When reservations were raised during sixth meeting of the Federal Textile Board last week, officials of the Finance Division assured textile exporters that funds will be released for duty drawback from the budget allocations as well as supplementary grants based on the claims submitted in the State Bank of Pakistan,” he said.
But no such commitment was fulfilled in the final approval of the federal budget 2017-18. He said their major working capital was stuck with the Federal Board of Revenue (FBR) as exporters had not received payments under the Drawback of Local Taxes and Levies (DLTL) scheme for the past many years.
“The textile industry will remain unviable if the government fails to return local taxes and levies on exports.”
Butt urged the government to act decisively and rescue the value-added textile industry from financial crisis as the worst-ever cash flow crunch had brought the country’s largest industry on the verge of disaster. The PHMA chairman called on the prime minister to intervene and direct the FBR to make payments without any further delay, adding only immediate payments of the outstanding refunds of sales tax could save the industry.
He suggested that the drawback of taxes facility, announced under the prime minister’s package till June 30, 2017, should be extended by at least a year. He also proposed that the government should release funds to the central bank for immediate payment of tax drawback claims to the hosiery exporters.
Speaking about power outages, Butt demanded that the government ensure 24-hour power supply to the export industry, which is currently facing load-shedding of up to 10 hours.
He also called for addressing the issue of difference in energy tariffs compared to regional countries and within the country.
Published in The Express Tribune, June 16th, 2017.