20000323

FPCCI justifies demand for cut in duty on polypropylene

RECORDER REPORT

ISLAMABAD: Traders evade Rs 500 million annually as sales tax on the value added products made from the imported polypropylene tape yarn grade.

This was stated by the chairman, standing committee of FPCCI on imports, Sardar Mohammad Ashraf Khan in a letter to the secretary National Tariff Commission. He contested the views expressed by the convenor of PCTA, Majeed Asghar in his letter to the secretary NTC that the plea of FPCCI to reduce import duty on the polypropylene tape yarn grade would lead to a loss of Rs 1 billion in the revenue.

He said that the reduction in the import duty of polypropylene would eliminate non-documentation of industry and sales would be registered leading to increase in revenue to a tune of 500 million. It would remove smuggling of bags/ raw material completely.

He said that even if duties are not reduced then under the GATT agreement all import duties would be reduced to zero by the year 2002.

Member managing committee of FPCCI said that out of the total imported polypropylene of 99,000 tonnes nearly 75,000 tonnes were imported by the traders and they evaded sales tax on the value addition, as they do not issue sales tax invoice to the buyers in order to avoid income tax.

He said that the traders evade 3.5 percent of the income tax on the supply of raw material to the industry and hence successfully evade Rs 50 million annually on this count. They also evade sales tax due to the non-documentation of the sales transactions of P.P.Bags produced out of the imported polypropylene purchased through traders resulting in evading of Rs 33.750 million turnover tax on this count.

He said that during 1999 total polypropylene import was 99,000 tonnes and the total tax collected by the government were approximately Rs 1.542 billion out of which only Rs 772 million were recovered on account of customs duty only. He questioned how the government would lose Rs 1 billion when the total amount received in taxes are not more than Rs 1.5 billion? He termed the opposition of traders to reduction of customs duty on raw material consumed by the industry, the first in the history of the country.

He said that lowering of duties would increase production which in turn would compensate for the loss of revenue. He said that the industry with Rs 10 billion investment and 30,000 direct and indirect employment is facing severe crisis due to smuggling, under declaration of prices and massive growth of informal sector in the industry due to the traders.