Amid growing resentment among the industrialists on the rising cost of doing business, the Federal Board of Revenue (FBR) is working on a proposal to bring the standard rate of sales tax from 17 percent to a single digit in consultation with international donor agencies. The involvement of the lenders in the financial and policy matters of the country indicates a bitter reality that how far this nation is independent in its decision-making. According to the business community, the imposition of sales tax is a trap to steal away their profit in legal manners and a hindrance in the growth of the country’s exports. The imposition of sales tax at 2 percent on exports was a bad decision of the PPP government, but the PML-N government made it worse despite opposing the step at the initial stage. The world statistics show that the cost of doing business is rising in Pakistan, as irrational steps have adversely affected the country’s exports, which have declined by 13.42 percent in the first quarter of the current fiscal year.
According to the world exports statistics, Bangladesh exports have grown by five percent and Vietnam by 9.20 percent during the same period. The government had made calls claims that it would bring the exports to $50 billion after getting concessions from the European Union, but it could not compete even Bangladesh and Vietnam on the export front. It seems the ruling elite is working on a specific agenda to halt the increase of export volume to benefit its coteries as overall exports showed a decline of 5 percent during the last fiscal year. Apart from imposition of hefty sales tax, high tariff of gas and electricity has increased the cost of production, making it difficult for the Pakistani exporters to compete in the world market. According to an official of a business organization, the government has blocked the huge liquidity of the exporters under sales tax refund, DLTL and customs rebate claims. He blamed the government for misusing the tax money on day to day expenses at the cost of national economy.
At a time the government was unable to refund 2 percent sales tax, how it will refund when it is increased to 50 percent is a million dollar question. The tax money is public money and it requires to be used on public welfare. Trade and industry are the main sources of income and if business is affected, the generation of money will be affected. The government must come with concrete measures to salvage the industry from collapse.