Business community demands for elimination of levies on exports to boost the growth of economy-ICCI
- February 23, 2009
ICCI President advised the government that instead of pushing up levies and taxes on existing businessmen, it should focus on maximising revenue generation by initiating efforts for increasing growth in manufacturing, agriculture, services and commerce to increase tax collection. He said government can generate far more revenues provided that it encouraged industrial growth by slashing customs duties on raw materials and cutting tax rates. To prove his point, he said that government had reduced customs duties on raw materials for motorcycles and this led to push up the sale of motorcycles from mere 100,000 in 2001 to one million units in the country in 2007 and also brought down the average price of motorcycles from Rs.60,000 to Rs.45,000 while sale tax collection for government on sale of motorcycles also increased to Rs.6.75 billion in the same period from just Rs.1.05 billion due to increase of sales revenue of manufacturers which rose to Rs.45 billion from Rs.6 billion. He said these figures clearly show that reduction in input cost eventually results into enhanced sales and increased revenue collection for the government.
Mian Shaukat Masud said that customs duties and sales tax are sufficiently on higher side in Pakistan as compared to other countries in the region as sales tax formed 46 percent of the total tax collection last year as compared to less than 10 percent in India and suggested that government should bring down sales tax rate to 10 percent which would bring down the prices of end products and result in more sales and increased tax collection. He also demanded for simplifying tax system and removal of distortions by taking initiatives for the creation of investor friendly income tax and GST regimes. He said energy shortages and high credit cost have already resulted into the closure of large number of manufacturing units while weak performance of industrial sector is also putting bad impact on other sectors of the economy. However, by cutting levies on exports and slashing tax rates, government can arrange a turn around in the sagging economy, he concluded.