May 14, 2008	Wednesday	Jamadi-ul-Awwal 8, 1429

LAHORE, May 13: The Lahore Chamber of Commerce and Industry has urged the government to announce a plan in the federal budget for the revival of industry crippled by the unprecedented energy crisis and increase in cost of doing business.

Releasing the budget proposals submitted to the federal government at a press conference here on Tuesday LCCI President Muhammad Ali Mian and Pakistan Industrial Associations Front chairman Mian Abuzar Shad said that the revival plan should include measures to ensure uninterrupted gas and power supply to thousands of industrial units, which have closed down due to shortage of the same.

They said that the government should also allow the industry to import its raw materials free of duty for one year. More than 250,000 industrial daily-wagers had been laid off in the provincial metropolis alone.

They said that that the government should also ensure that rate of customs duty on import of raw material is considerably lower than the rate of duty on finished products.

The industry is experiencing difficulty in marketing its products due to low rate of duty on import of finished products, they added.

The trade deficit had exceeded $16.8 billion because of flooding of markets by imported products. A large number of toys, shoes, plastic and household goods manufacturing units have closed down.

The duty-free import of raw materials could make the products of such unit competitive and help in their revival, they added.

They pointed out that the government should allow duty-free import of power generation equipment and start immediate construction of Kalabagh Dam and 35 small dams in Punjab for generating cheap hydel power.

They also stressed the need for increasing the income tax exemption limit from Rs100,000 to Rs200,000 in view of unprecedented inflation and measures to increase the number of taxpayers from the existing two million (including 63,000 sales tax payers) for increasing revenue generation.

They suggested that the revenue should be boosted by increasing the number of taxpayers through reduction of tax rates instead of recovering more tax from the existing assessees.

The plan for bringing the industrial and commercial units paying over Rs.600,000 in the form of electricity bills in a year into the tax net should be implemented.

Sales Tax rate should be reduced from 15 per cent to 10 per cent without any discrimination between the corporate and non-corporate sector assessees.

They said that 0.02 per cent withholding tax on withdrawal of more than Rs25,000 from banks should be abolished in view of growing risk in carrying cash on account of the law and order situation.

Customs valuation system should be improved to control the menace of mis-declaration and under invoicing, which was causing revenue losses of Rs40 billion per annum on imports from China alone.

Fifteen per cent sales tax levied on computer monitors and printers in 2005 should be withdrawn as it had resulted in increase ian smuggling and was impeding the growth of the indigenous IT industry.

They said that the government should take notice of large scale smuggling of grease. Only one unit was manufacturing 2,000 to 3,000 metric tons of grease annually and the rest was being smuggled from Iran and other countries. Its import should be exempted from excise duty and customs duty.

Three to four per cent value-addition formula prescribed for five sectors, including tyres and tubes, motorcycles, electric appliances, sanitary ware and steel products, adopted on the recommendation of LCCI three years back and withdrawn later, should be restored.

Duty on import of other categories of tyres should be reduced to 5 per cent and withholding tax to 2 per cent. Marble and granite should be cleared on 25 per cent prescribed customs duty rate instead of higher rates as was being done by the customs authorities at present.