MULTAN, Pakistan Cotton Ginners Association (PCGA)said that the FBR is killing the goose that lays the golden eggs as it has imposed 4 percent withholding tax on the entire textile value chain that will ultimately lead to the closure of the whole industry. Addressing a hurriedly called Press conference here PCGA's Vice Chairman Mehr Muhammad Ashraf Mahar, Former Chairmen Haji Muhammad Akram, Shehzad Ali Khan,Ex-Vice Chairman Aasim Saeed Sheikh said that FBR repeatedly stated that tax on domestic commerce was 1 percent instead of 4 percent as there is no change in the income tax laws, rules and regulations. However, last night to our utter surprise and disappointment a ‘clarification’ by FBR was issued stating that the withholding tax on the entire textile value chain would be 4 percent,” The final blow of 4 percent imposition of withholding tax on entire textile value chain will surely hasten to the closure of these factories resulting in massive de-industrialization loss of revenue to FBR and unemployment of over a million people.’’ They said that ‘’This measure is example of extreme shortsightedness as 4 percent of the gross value of each invoice as advance income tax cannot be recovered and will necessarily become part of the cost.’’ Quoting an example while looking at the cotton purchase from the ginners, a 4 percent deduction from the ginners invoices will lead to pressure on ginners to reduce the price they pay for cotton procured from the farmer as their own tax liability in reality is only for ginning charges which constitutes 35 percent of the ginned cotton.They said that withdrawal of subsidy of Rs.3/unit announced by Prime Minister for Industry and addition of Quarterly Tariff Adjustment(QTA) had increased the electricity charge by Rs.4.80 per unit. Consequently they have received inflated electricity bill with excess payment of Rs.3 to 10 lakh.They further said that Ginners can't affort 16 percent mark-up and six to 7 percent spread on loans because entire profit would go to bankers pocket.They would be empty handed after doing work round the clock.They further said that Oil-cake(Khal) must be declared as animal feed and be exempted of all taxes.
