KARACHI, Dec 31: The Pakistan Tanners Association (PTA) has opposed the Federal Board of Revenue proposal to increase withholding tax on exports and imports.

Increase of withholding tax on imports and exports at a time when the world market is heading towards a deeper recession and when the leather industry has already recorded a decline of eight per cent in the first five months of current fiscal over the corresponding period last year would cause harm to the industry.

PTA chairman Agha Saiddain said in statement that due to adverse global economic conditions and recession exports are already under pressure. India, China and Bangladesh have announced various incentives for leather industry to secure their foreign markets but the industry in Pakistan was being burdened with taxes to narrow budget and current account deficits.

Mr Saiddain cautioned that any move to burden import of industrial raw material, like chemicals, accessories and raw skins, by more taxes would make our products uncompetitive against neighbouring countries’ products.

He stressed the need for increasing country’s exports to narrow the current trade gap which is consistently widening with every passing year.

“The government should instead increase taxes and duties on import of luxury goods only.”

Agha Saiddain said frequent power outages and suspensions in gas supply have already affected industrial growth and large- scale manufacturing had declined by 6.2 per cent in the first quarter of the current fiscal year.

He said there was a need to improve our basics, like energy and infrastructure. “Such factors are also discouraging local investors, particularly when foreign investors have already shun their investment due to law and order conditions in the country,” he said.