17pc GST to ruin export industry, claims APTMA

ISLAMABAD: The imposed General Sales Tax (GST) of 17 percent in the budget 2019-20 will force the export industry not to function as it will create the huge liquidity crisis, advisor to APTMA (All Pakistan Textile Mills Association) Shahid Sattar told The News.

Though the government has done away with zero rating for export industry that includes textile, surgical, carpet, sports and leather sectors and imposed sales tax of 17 percent, but APTMA will hold its meeting today (Thursday) and will make its formal response to the budgetary measures.

However, he said, that APTMA wants the government to enforce the robust and reliable Sales Tax Refund Mechanism to avoid liquidity crisis in the export industry. He argued that under current scheme of 17 percent GST, industry will find impossible to function due to extreme lack of liquidity. “Industry simply did not have liquidity of Rs600 billion to pay the sales tax and then await payment of refunds. The refund cycle with best of intents would take 6-8 months.”

He mentioned that the track record of the government whether finance, FBR or State Bank was extremely negative as far as refunds are concerned which have been delayed by many months and even years in certain cases. He said under the given circumstances industry would collapse if further liquidity is mopped up by the government and more importantly the cost of doing business would increase by Rs150 billion per annum for the textile sector destroying Pakistan’s hard won competitiveness through rational energy pricing.

Sattar further explained, saying that even at present the obtaining of sales tax refunds from FBR entailed an additional 4% unjustified expense.

He said if no quick guaranteed sales tax refund mechanism is ensured then the industry will automatically die down and more than 2 million jobs of directly employed workers would be at risk. “And it will be having extremely negative consequences for the country’s balance of payments.’