LAHORE/KARACHI: On the first business day after the nationwide traders’ strike, various chambers of commerce and industry associations gave a mixed response. Where all agreed that documentation of the economy is a worthwhile objective, some felt that the government should adopt a softer approach towards the concerns of the trader community whereas others denounced the use of strikes as a tool to advance commercial interests.
The All Pakistan Textile Mills Association (Aptma), one of the country’s largest industry associations, said that the textile industry is grinding to a halt due to the budgetary measures. “Local sale of the textile sector has started declining fast in the wake of buyers’ continuous disinterest in entering into any trade-related transaction due to imposition of 17 per cent tax and provision of copy of the CNICs,” Aptma Chairman Syed Ali Ahsan told reporters in a press conference on Monday.
“The impact of the declining trade of the textile and other goods (yarn and fabric) is heading toward closure of the manufacturing business, and around 20 textile mills have already been closed, either partially or completely,” Ahsan claimed.
“We are with the government in its move to achieve tax collection target set for 2019-20,” he emphasised. “But the government must keep in mind that the way it plans to do this is not at all viable to achieve this target, as the trade sector has almost stopped buying.”
Warn of serious fallout if deadlock persists
Aptma group leader Gohar Ejaz went a step further. “Where should we go when our manufactured goods remain unsold?” he asked. “On the other side, due to variation in inflation while comparing Pakistan with other countries, we are also facing problems in our exports. At present, you can say, that the country’s business activities have reached to a halt.”
The Aptma leadership called for the reduction of applicable sales tax from 17pc to 7.5pc on local sales.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the apex trade and industry association, was a little more restrained in its reaction.
In a joint statement issued on Monday, FPCCI President Daroo Khan Achackzai, former presidents S.M. Muneer, Iftikhar Ali Malik and Mian Zafar of Faisalabad Small Traders Chamber urged Prime Minister Imran Khan to solve all issues of the business community through consultation.
In the statement, the FPCCI expressed support for the goal of documentation of the economy, but also expressed “serious concern over the problems of small traders” without getting specific.
The Karachi Chamber of Commerce and Industry (KCCI) in a statement said that “the chamber fully supports the government’s resolve to bring everyone into the tax net” but expressed concern that the government has opened too many fronts in its strident efforts to document the economy. “In order to achieve the desired results in terms of revenue collection, the government has simultaneously opened many fronts which have terribly disturbed the entire business cycle and it was the basic reason behind why they [the government] have been facing agitations and resistance,” the press release quoted Siraj Kassam Teli of the Businessmen’s Group, a powerful grouping within the KCCI, as saying.
Meanwhile, KCCI President Junaid Makda said that he appreciated the prime minister’s remarks about partnering with the business community in order to resolve issues and ensuring ease of doing business, he nevertheless “requested a flexible approach while dealing with loyal taxpayers.”
The KCCI also advanced a few concerns about the discretionary powers given to the officers of the Federal Board of Revenue, that they fear will be used for harassment of taxpayers. It quoted Teli as saying that “the government has devised numerous laws and amendments with a sincere intent to enhance tax collection but we fear that most of these laws and amendments which have enhanced discretionary powers to FBR officials even at lower level would only be used to harass the taxpayers in order to seek personal benefits and gratifications.”
Meanwhile, the Lahore Chamber of Commerce and Industry (LCCI) took a more pragmatic line. “There are misunderstandings among the traders in particular, which need to be addressed urgently,” LCCI President Almas Haider told Dawn via telephone on Monday evening.
“They think they need a copy of CNIC to be attached to every invoice. So many photocopies may not be physically possible. This is not correct. Similarly, the rate of withholding tax is also high compared to their margins, the government should be flexible here,” he added.
The Faisalabad Chamber of Commerce and Industry (FCCI) Chairman, Syed Zia Alamdar Hussain, said the deadlock between the government and traders over 17pc tax and CNIC issue still persists. “We had a meeting with the FBR’s top officers on Monday. Though the government has agreed to reduce turnover tax from 1.5 to 0.2 or 0.3pc and 4pc withholding tax to 1pc, it is not ready to reduce 17pc sales tax. Similarly it did not agree over the CNIC issue,” he told Dawn when contacted.
However, Mr Hussain termed the meeting a positive development towards resolving the issues. “They [the FBR] have also agreed for imposing a fixed tax on the shopkeepers and small traders or wholesalers. So let see what they do about other issues that are still unresolved,” he added.
The Sialkot Chamber of Commerce and Industry President Masud Akhtar termed the traders’ demands genuine. “It is good to hear that the government has agreed to relax the requirements on traders to some extent. But their main demands are to reduce 17pc tax and withdraw condition of CNIC provision on all business transactions,” he maintained. “So I would request the government to resolve the traders’ issues immediately, as the entire industry is in problem due to their strikes” he added.
Published in Dawn, July 16th, 2019