inShare Textile, leather industries flay budget 2013-14

Textile, leather industries flay budget 2013-14

Textile, leather industries flay budget 2013-14Textile, leather industries flay budget 2013-14

All Pakistan Textile Mills Association (APTMA) and Pakistan Tanners Association have apprehended increase in industrial cost and high inflation due to various budgetary measures introduced for the fiscal year 2013-14.
“Under Federal Budget 2013-14 the government has increased Sales Tax from 16% to 17% to increase its Revenue Target. But higher percentage of Tax always gives birth to malpractices such as under-invoicing and other corrupt practices. As a result the government may lose both Sales Tax and Customs duty due to under-invoicing on imported items. On the other hand the general public will face more inflation and prices of all commodities will increase, observed PTA central chairman Agha Saiddain. 
APTMA spokesman said that textile industry cannot sustain, as the federal budget for 2013-14 has added another 2 percent as Further Tax on supplies to unregistered persons, which would encourage re-introduction of fake registrations and flying invoices. The FBR had withdrawn the zero rating regime for textile industry after due deliberations and reduced the rate to 2 percent irrespective of supplies to registered or unregistered persons within the five zero rated sectors. The addition of 2 percent Further Tax would again create an arbitrage alluring tax officials and fake companies to register temporarily to do business of flying/fake invoices.
“Secondly the government has planned to face balance of payments through foreign investments by auctioning 3G license and some other measures, whereas, it would have been prudent to bring export friendly policies and built our foreign exchange reserve through increase in exports and by applying import substitute measure,” Agha Saiddain added.
He further said we were expecting more creative budget from Ishaq Dar but his budget speech was traditional and routine like past. Keeping in fiscal deficit of 8.8 percent of current year with huge public debt of Rs. 14284 Billion the revenue target of Rs. 2598 Billion is insufficient as such the real budget is hidden under apparent budget announced by the government.
Agha further added that the previous government violated Debt Limitation Act 2005 and allowed Public Debt to grow by 88% in the last five years. Pakistan can easily manage higher tax collection by expanding tax base and by bringing more people in tax net including agricultural sector. Why a person with large landholding is exempted from tax payment is beyond normal common sense. At first stage government may impose agricultural tax on landlords with huge landholdings and gradually bring it down to the reasonable level.
APTMA spokesman said that budget 2013-14 has provided legal backing to the CREST for verification of input tax of the textile industry supply chain. This system is already causing discrepancies on industry sales due to technical hitches leading to unnecessary notices and harassment. The FBR should improve the CREST system to overcome discrepancies to avoid undue hardships to the taxpayers, he stressed.
Also, he said, the FBR has disallowed input tax adjustment in a situation when refunds of billions of rupees of the textile industry are already stuck up with the system.  He urged the Finance Minister to issue direction to the FBR for liquidating all pending refunds of sales tax, income tax and customs, enabling the industry to meet liquidity requirements.