KARACHI, June 10: The government has failed to keep its promise in addressing the issue of sales tax on stationery items in the budget for 2003-04. Local writing instrument makers say that additional allocation of funds for education may not produce results if students continue to pay high prices to buy stationery items.
Local industry says that computers used by affluent class continue to enjoy total exemption from sales tax, whereas basic and everyday educational stationery items such as pencils, pens, inks, etc., used by all are still subject to 18 per cent sales tax.
Raw materials and components used in DVDs, VCRs, etc., are allowed at five per cent customs duty, whereas components used in stationery items are subject to 10 per cent customs duty.
Writing Instruments Manufacturers Group (WIMG) chairman Riazuddin sent a letter to Finance Minister Shaukat Aziz on June 9 to remind him of his promise which he made at the Site Association’s visit for addressing the issue of disparity in sales tax on stationery items in the new budget. “The budget is silent,” he said in his letter.
By ignoring local industry it seems the government wants more and more people to waste their time in watching movies and surfing the net instead of pursuing education, he said in the letter, which was also addressed to Education Minister Zubaida Jalal and Higher Education Commission (HEC) chairman Prof Dr Atta-ur-Rahman.
On June 6 (one day ahead of the budget), HEC chairman Dr Atta- ur-Rahman in a letter to the WIMG chairman said: “I will do what I can so that taxes on materials used in basic education are removed or reduced substantially.” However, nothing has been done in the new budget despite assurance by the HEC chairman.
Besides heavy taxation on local manufacturing, the industry is already faced with problems over the rising influx of smuggled, under-invoiced and misdeclared stationery items in the markets.
He said the association had approached the collector of customs (appraisement) to check clearance of items through massive evasion of taxes and income tax — but nothing concrete had been done so far and arrivals of goods through illegal means continued to thrive. Mr Riazuddin said foreign made fountain pens, ball-point pens, pencils and a variety of other stationery items had already flooded local market. Bulk of these items originate from China. There are also stationery items coming from Indonesia, Iran, Germany and Malaysia. Local stationery industry operators contend that all these foreign writing instruments and stationery items now command 42 per cent of local market, rendering their production capacities idle.
Quite a big quantity of foreign fountain pens, ball-point pens, pencils, drawing pins, staplers, glues and adhesives, markers, writing ink and many other stationery items are simply smuggled across the border or brought here in the baggage by the passengers from abroad.
However, local producers are actually worried over a sizable quantity passes through customs check-posts and at the ports where these goods are misdeclared and under-invoiced in connivance with the customs staff.
The entry of imported items, specially from China has opened up a tough price competition in the markets. People are purchasing imported items despite low quality as compared to the locally produced items. People are also seen selling Chinese ball pen at the road side stalls and buses at Rs5 with four colour refills and some retailers are charging Rs10 for four ball-point sets.
