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7pc sales tax on milk products, oil seeds other essential products be withdrawn: KCCI

7pc sales tax on milk products, oil seeds other essential products be withdrawn: KCCI

KARACHI: The Leadership of Businessmen Group & Karachi Chamber of Commerce & Industry (KCCI) have expressed reservations on various taxation measures taken by the federal government through Supplementary Finance Bill 2021-22 on IMF dictates which will not only have negative implications for industry and trade, but will also overburden the poor and middle-class segments due to increase in prices of consumer goods.

In a joint statement, Chairman Businessmen Group Zubair Motiwala, Vice Chairmen BMG Tahir Khaliq, Haroon Farooki, Anjum Nisar & Jawed Bilwani, General Secretary BMG AQ Khalil, President KCCI Muhammad Idrees, Senior Vice President Abdul Rehman Naqi, Vice President Qazi Zahid Hussain and Former Senior Vice President Ibrahim Kasumbi demanded that the Supplementary Finance Bill 2021-22 should be revisited and should not be implemented without taking the main stakeholders on board. They pointed out that harsh measures and withdrawal of exemptions on inputs of essential consumer items such as Packaged Dairy Milk, Oil Seeds for sowing, Plant & Machinery and industrial raw materials including Raw Cotton etc. will have a detrimental impact on the economy by terribly affecting industrial performance and also the lives of the poor masses.

These harsh measures have been imposed to such an extent that they have imposed taxes even on milk and many other items of daily consumption, making the lives of the poor masses more miserable. Talks to increase petrol prices by Rs4 per liter every month and also raising the electricity and gas tariffs give an impression that the IMF has devised a program to make Pakistan completely unviable, they added.

They emphasized that instead of putting additional tax burden on industry and the consumers for complying with IMF conditionalities, the government and FBR should intensify efforts to broaden the tax base and generate additional Rs.340 billion target compared to number of unregistered persons was not that bigger target. In fact, the government can generate significant additional revenue by plugging various loopholes including exemptions given on import of various items for PATA/FATA which were massively being abused. This includes Steel Sheets, Bulk Edible Oil, Steel Sheets and Plastic materials etc. Moreover, massive smuggling of Black Tea, Edible Oil from Iran, Auto Parts and many other high value products was also going on which causes heavy loss of revenue to the exchequer.  IMF can only provide broad guidelines to curtail fiscal deficit and cannot micro-manage the economy. Therefore, it is unjust and unfair to continue targeting those sectors which are tax compliant and unable to bear more taxes.

BMG and KCCI leadership stated that Vide amendment Sec.23 (sub-sec.1, G) of Sales Tax Act 1990, the supplier has been held liable under the new law for fake CNIC number provided by purchaser, whereas earlier the Seller/Supplier was not held responsible for fake CNIC provided by purchaser. Already small number of around 50,000 entities are registered in Sales Tax regime. Putting additional burden of liability for fake CNIC and Further tax of 3 percent over and above 17 percent, will result in many persons going out of Sales Tax net and was tantamount to absolving the tax authorities from broadening the tax base. It appears that business and industrial community was being compelled to shut down businesses forever, they said, adding that the rate of Sales Tax on import of raw material has also been increased from 5 percent to 10 percent. If somebody comes in and buys in cash and pays the penalty described under law then how can a seller ask for verification of CNIC. Why we can ask for CNIC verification when he is paying 3 percent additional charges surcharge. The government has to understand that they were granting permission to stay unregistered by paying 3 percent penalty.