ISLAMABAD, April 27: The government is likely to remove 10 per cent duty on the import of laboratory equipment, plant and machinery, used by the pharmaceutical industry in the next budget.
Official sources told Dawn that the existing 10 per cent import duty on raw material
, also used by the pharmaceutical industry, was also expected to be eliminated in order to lower the prices of medicines in the country.
A proposal has also been made to bring down General Sales Tax (GST) rate from 15 per cent to 10 per cent for packing material being used by the pharmaceutical industry.
Sources said that the Board of Investment (BoI) has finalized a set of recommendations which also included the reduction of import duty from 25pc to 10 per cent for vitamins used by the poultry feed industry.
The government had raised this duty from 10pc to 25pc last year, which has now been recommended to be brought down to an original position to help the poultry industry. Similarly, the BoI recommended to offer 3 to 4 per cent incentives for the export of gems and jewellry industry.
The sales tax on the import of raw material for various industries has also been recommended either to be considerably brought down or rationalized to help create greater economic activity in the country.
However, the sources said that the IMF and the World Bank were opposing reduction in sales tax rate on the grounds that it will mar the government's efforts to collect adequate taxes.
"We are telling the government that the increased sales tax on various items is affecting the competitiveness of our industry with our neighbouring countries, therefore, it should be brought down to a certain acceptable level," a source said.
"We have also asked the government that the continued acceptance of conditionalities of the International Financial Institution (IFIs) will not fulfil the dream of long term economic development in the country," he further stated.
He said that the BoI would soon be submitting its recommendations to the government for lowering the GST rate that has also been proposed by the business bodies including the Federation of Chamber of Commerce and Industry (FPCCI).
Another source said that in real sense the prevalent GST rate was from 15 to 20 per cent, which needed to be reduced. He quoted President Gen. Pervez Musharraf as having said recently that the GST rate needed to be brought down gradually.
Vice President of the FPCCI Sohail Altaf when contacted said that the business community was expecting the reduction in the sales tax rate for various industries in the budget for 2004-05.
"With the new chairman of the CBR, we hope that GST rate will be cut to facilitate the business community," he said adding that he had met Abdullah Yousef recently along with a delegation and he assured that the apprehensions of the business community over sales tax would be removed.
Altaf said that when across the board customs duty was reduced, the revenue of the government got doubled two years ago. "And now if the GST rate is reduced, it will certainly help increase the CBR revenues," he asserted.
