PAC chairman Nadeem Afzal Gondal. – File Photo

KARACHI: All the five export-oriented industries have threatened to go on a strike if government fails to withdraw three controversial SROs withdrawing their zero rated status from sales tax.

A largely attending meeting held on Wednesday at PHMA House of the five sectors, including leather garments, value-added textile, sports goods, surgical and carpet, urged the Federal Board of Revenue to immediately do away with the refund system as it would promote corruption and harm country’s exports.

These leaders said that the FBR chairman in the last meeting had agreed that the refund system would promote corruption and status of zero rating from sales tax of the five exports-oriented industries would be restored.

However, they said the FBR chairman, Ali Arshad Hakeem, did not fulfill his commitment and seems to be helpless in front of bureaucracy which would like to keep such a system intact where corruption could be easily made.

All the five export-oriented industries, they said, had suggested to the FBR to amend SRO 1125 of 2011 wherein all registered persons in the sales tax should be allowed to enjoy zero-rating but those not registered should be asked to pay nominal non-refundable tax at two per cent.

These leaders said that the recently issued SRO 154(I)2013 withdrew their zero-rated status from sales tax but at the same time maintained status for spinners and it was not only discriminatory but also indicates that some under-hand dealing may have taken place.

They accused the FBR officials of discouraging those who are registered with sales tax and are encouraging un-registered persons to promote corruption in the entire taxation system.

These leaders said that the chairman of Public Accounts Committee, Nadeem Afzal Gondal, in a recent meeting directed the FBR to refrain from issuing SROs without the approval of the National Assembly.

Mr Gondal informed the committee members that tariff and duty adjustments could only be done by the parliament.

The leaders of five export-oriented industries said that they are against SRO culture because it does not only promote corruption, but also gives a message that some sort of underhand dealing had taken place between FBR officials and beneficiaries.

The participants were critical of government policies and said that it seems that a deliberate attempt was being made to destroy the export-oriented industry.

These leaders further said that instead of consulting the real stakeholders, the FBR took into confidence those industrial sectors who sell their goods to unregistered persons.

These leaders said that the five export-oriented industries are major foreign exchange earner for the country and provide employment to a very large segment of work-force.

Even today, they said, the FBR had to pay around Rs60 billion to these five sectors against sales tax refunds, DLTL (drawback on local taxes and levies), and customs rebate which has created liquidity crunch for the export sector.

The high tariffs of utilities and power and gas outages have already crippled the industry and deteriorating law and order situation is causing flight of capital at a large scale.

They complained that the government, instead of facilitating export-oriented industry to keep it competitive in the world market, is discouraging them and putting unnecessary burden. They urged the FBR chairman to immediately withdraw SROs 140, 98 and 154 issued recently.