Federal Board of Revenue (FBR) increased RDs, ranging from between 5 to 80 percent on the import of 713 items, including imposition of RD on 97 new items, from October 17, 2017 after approval from the Economic Coordination Committee (ECC) of the Cabinet.
Chairman National Assembly Standing Committee on Finance, Qaisar Ahmed Sheikh, lamented the fact that the Finance Ministry did not give due weight to his Committee, and protested to the Commerce Minister for not taking industry on board prior to the recent imposition/increase of RD. When contacted, Secretary Commerce, Younus Dagha confirmed that the RD recently imposed by the government is being reviewed. "Yes, we are undertaking this exercise in consultation with the industry representatives and will send recommendations to FBR this week," he added.
Asked if the recommendations will be on-sent to the ECC which is the competent forum to take such decisions, he said "let''s see the extent of changes and we will then decide the forum of decision." Last week, local industry approached Chairman Senate Standing Committee on Finance, Senator Saleem Mandviwala who invited them to give details of the impact of RD on their specific industries to the committee members and commerce ministry and FBR officials. The local industry representatives duly attended the meeting and informed the participants that the recently imposed RD on raw material imports was negatively impacting on their industry.
Textile sector urged the committee to press the government to withdraw 10 per cent RD on gas generators as well as RD on inputs of textile value chain being used by the industry. All Pakistan Textile Mills Association (PTMA) pointed out that RD on textile inputs and gas generators has an adverse impact on the industry and increased their cost of production. On the request of the textile industry, Senate Standing Committee on Finance recommended to the government to withdraw notification of 10 percent RD recently imposed on 1250 KV gas generators.
APTMA highlighted the importance of textiles in Pakistan''s economy: it contributes 62 percent to total exports, 8.5 percent to GDP and was the largest consumer of domestic cotton. The immediate additional potential for exports is $3.6 billion this year. The textile association also pointed out other issues impacting on its growth and requested withdrawal of electricity surcharge of Rs 3.5/kwh to bring it at par with the regional rate of Rs 7/kwh and requested duty/tax free import of cotton and to ensure that the Federal Board of Revenue (FBR) exports all items under duty and tax remission scheme (DTRE).
The Auto Parts Association stated that it operates under SRO 655 which defines tariff and duties for the industry. The industry has been importing raw material for the manufacture of air conditioners to supply to the auto industry. The government''s decision to impose RD has impacted on the cost of five raw material items of air conditioners and as a result the cost of locally manufactured air conditioners will be comparable to imported ones and local industry will therefore be at disadvantage.
Tyre Association in its presentation stated that the price of tyres of small vehicles has surged by Rs 500 per tyre and for big vehicles between Rs 4500 per tyre to Rs 5000. According to the tyre industry only 20 percent demand of tyres is met by domestic production while the remaining 80 percent is met through import. The increase in price will further encourage smuggling of tyres in the country, they maintained.
The FBR stated a summary will be prepared on the basis of a list of anomalies in imposition of RD identified in consultation with industry which will then be placed before the Economic Coordination Committee of the cabinet for approval to remove the RDs.
Copyright Business Recorder, 2017