KARACHI, May 24: The Pakistan Sugar Mills Association (Sindh zone) has urged the government to rationalize corporate tax to 25 per cent on public companies and 28 per cent on private companies and exempt sugar from sales tax for being an essential food item.
In the budget proposals for 2005-06, the association argued that rationalization of corporate taxes would not only strengthen the sector but would also help to broaden the tax base.
The association was of the view that this measure would support exports as under the World Trade Organization regime duty structures governing foreign trade were on decline. Consequently, tax reduction would partly compensate for emerging price competitiveness in exports for industries catering to national and external markets and face onslaught of imports.
It further emphasised that industrial investments needed preferential deal in contrast to trade promotion as it would bring more socio-economic benefits — increase in gross domestic product, employment generation and expediting public welfare.
PSMA (Sindh Zone) Chairman Abdul Wajid in his budget suggestion stressed upon the need to contain interest rate at seven per cent, or at the most to single digit. The present trend of acceleration is poised to raise it to double digit, he cautioned.
The recent mopping operations by State Bank of Pakistan were bound to make borrowings by industrial sector costly. “The most documented sector will suffer by this move,” it added. The association has suggested that the government should pursue a prudent policy of curbing inflation which should not trigger economic downslide.
The PSMA also drew the attention of the budget-makers towards sugar industry’s problems and stated that being a seasonal, agro-based, belonging to food-segment and located in rural landmass it needed special consideration.
The sugar industry is catalyst of rural development yet its contribution in this regard has never been recognized, therefore, a sustainable sugar policy should be formulated. It also demanded the linkage of sugar price to sugarcane price.
The industry should be provided adequate financing on special terms due to its seasonal character, working for four months while holding inventory for a year plus, as demand for sugar is inelastic.
The PSMA demanded that since sugar was no more under the excise duty regime, therefore, maintenance of excise duty records by sugar industry be struck off, as it involved lot of paperwork of least use.
