ISLAMABAD, June 30: The textile industry ministry has moved a summary to the economic coordination committee (ECC) of the cabinet seeking cash subsidy between Rs30 and Rs50 billion for textile and clothing exporters.

The summary, moved by Textile Industry Minister Ahmed Mukhtar, has demanded the money to be raised in the shape of general sales tax (GST) from poor consumers, while the industry is enjoying complete exemption from all taxes except one per cent withholding tax on export proceeds.

An informed source told Dawn on Monday that the industry has not taken into confidence the committee constituted by the prime minister before moving the summary to the ECC for consideration on Tuesday in Karachi.

Yousuf Raza Gilani had constituted a high-level committee in the ECC meeting held on June 3 last to work out the economic implication of the hefty subsidy package. The committee includes representatives of textile, commerce, and Federal Board of Revenue and the State Bank governor.

According to the source, Mr Mukhtar, who is also a textile exporter, has proposed various slabs for duty drawbacks, which would be based on the exports volume. The proposed slabs are between minimum of $01-15 million worth exports to maximum $100 million.

Analysts said this means that those who have higher volume of export proceeds will draw maximum pie of the cake, while leaving the small exporters a very minimal share. The action will result into wiping out of small exporters from the business at the support of the taxpayers money, they added.

He said that to eliminate the chances of fake invoices or refund claims, which ran into billions of rupees, the government introduced the concept of zero rating.

This special duty drawback rates would revive the old culture of corruption in the tax machinery and would result into billions of rupees loss to the kitty.

The exporters in connivance with the tax officials would easily file fake claims for getting undue rebates, he said, and added the whole move of the tax machinery reforms would also become meaningless.

The government has already doled out more than Rs33 billion to the textile exporters during the last over two years under the head of six per cent research and development (R&D) subsidy, which is expected to reach Rs50 billion when figures for the current fiscal year is finalised.

After claiming huge cash subsidy, concessions on bank loan rates and also on export refinance in last few years, the pace of growth in textile exports did not accelerate, which remained stagnant at four per cent between April 2005 and Jan 31, 2008. However, the exports witnessed a negative growth since February last.