ISLAMABAD, April 26: The Islamabad Chambers of Commerce and Industry (ICCI) has proposed to the government to exempt all imported inputs used in export items from payment of local levies and taxes.
The ICCI budget proposals for 2004-05, a copy of which was released here on Monday, has also suggested to the government to reduce the general sales tax (GST) to 10 per cent on all products at both local and import stage.
According to the ICCI the exemption on inputs would make local products more competitive in the international markets. It was pointed out that in one province there were as many as 25 local taxes which was causing a lot of delays and agony to the exporters.
The chamber in its proposals also asked the government to allow import of Heavy Melting Scrap (HMS) by steel industries at the rate of 10 per cent customs duty. Sales tax presently on all steel industrial raw materials was 20 per cent at import stage and intermediate stage. This must be reduced to 15 per cent.
It has been proposed to abolish withholding tax at import stage on all industrial raw material. Currently, there was 6 per cent withholding tax on all raw materials. The minimum threshold for personal tax should be increased to Rs200,000 taking into account inflation over the last three years.
It was suggested that withholding tax against supply and import be rationalized particularly for industries using imported raw materials for their products. At present 3.5 per cent tax was levied on supplies and 5 per cent on import, both should be reduced to 2.5 per cent.
There was an urgent need to streamline Wapda and to rationalize its tariff rates, because under the existing scenario Pakistan's exports would considerably decline and a number of industrial units would face closure of operation.
The industrial and agricultural sectors of Pakistan's economy were faced with a grim situation. Production costs were continuing to rise and Pakistan was fast losing its competitive edge in the world market.
Electricity tariff in marble industry at present was too high, making this industry non-competitive. This tariff should be reviewed and brought down to enable the industry to survive and market its products effectively.
The ICCI recommended to the government to consider establishing warehouses in collaboration with the private sector in selected countries/regions, such as the USA, the UK, Europe, Africa, the Middle East and South Asia. This measure would result in boosting Pakistan's foreign trade.
Excise duty was payable at a rate of Rs4.84 per mcft of gas whereas there was no such duty on crude oil production. This anomaly needed to be removed or any other relief be provided to gas producers particularly to encourage development of gas field of small reserves to make the project economically viable.
