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Traders warn against delay in ST issue resolution

RECORDER REPORT

KARACHI: A largely attended meeting of the representatives of the chambers and trade associations from all over the country has expressed serious concern over the delay in resolution of sales tax issue and warned that any further delay would nullify the government's efforts for early revival of the economy.

The meeting held here on Thrusday in Federation House here and presided over by Mahmood Ahmad, acting president, Federation of Pakistan Chambers of Commerce and Industry was attended by more than 80 representatives of trade and industry including FPCCI Vice-president and Zonal Chairman Sheikh Jamil Mehboob Magoon, Vice-president Maqsood Ismail, Karachi Chamber President Amjad Rafi and several past presidents of the FPCCI.

The participants of the meeting expressed concern that the firm assurance given by the Finance Minister Shaukat Aziz to a delegation of the FPCCI during the meeting held on January 4 that the urgent issues pertaining to sales tax would be resolved in a week's time has not been fulfilled.

The meeting felt that some hidden forces were out to create bad blood between the government and the business community so that the efforts for the economic revival might not succeed.

It was stressed that the sales tax law in its present form is not acceptable being inequitable, discriminatory and is against the fundamental rights given in the constitution and needs to be scrapped.

The fact that a few are registered under sales tax and a vast majority engaged in similar economic activities is left out is a clear case of discrimination. Besides, identical economic activities have been taxed at different rates i.e. zero percent, 2 percent, 15 percent, 18 percent, 23 percent and certain fixed rates, the fixation of which is the discretionary domain of the tax collecting machinery.

It was felt that the undue focus on GST would only result in increasing the number of defaults and sick units. Instead, the government's policies should concentrate on economic growth which will ultimately increase the government revenue and address problems arising out of increasing unemployment.

The meeting felt that the tax payers should be protected against the harassment by the tax collectors. The creation of tax ombudsman will not be enough.

It was noted that the FPCCI and the business community were striving hard for the redressal of problems created in the wake of federal budget 1999-2000 such as levy of 3 percent additional sales tax on sales to un-registered persons, multiplicity of audits, the plethora of records for sales tax and high rates of penalty and additional tax but instead of removing these problems, new problems have been created for the trade and industry.

The meeting urged that the condition of payment of 25 percent additional tax and penalty in the amnesty scheme announced for the recovery of sales tax arrears be withdrawn in view of the exorbitant and unjustified high rates of penalty and additional tax for those who are already in the ST net.

The participants criticised the new requirement of payments of Rs 50,000 and above through cheques, pay order and bank draft to be eligible to get refund or adjustment of sales tax and said that in an environment where sales were made in cash, credit or Hawala payments the new requirement would create more hurdles than removing them.

They also criticised the enforcement of new procedure for the valuation of imported goods on the basis of valuation database without consulting the FPCCI and the trade bodies.

The meeting stressed the urgent need for the withdrawal of wealth tax as promised by the CBR so as to divert resources for the much required investment for moving the economy forward. The fixation of GP rates on a realistic basis for assessment of income tax is also a long pending issue requiring urgent resolution.

The FPCCI's latest stand calls for scrapping the sales tax law claimed to be in confrontation with the constitution of Pakistan, wherein fundamental rights speak of non-discrimination while sales tax law is discriminatory providing different rates of taxation for identical activities divide line of which is based on the turnover.