Carpet manufacturers warn of shutdown over tax regime changes M Haris

Carpet manufacturers are issuing a stern warning to the government, cautioning that proposed changes in the tax regime could force them to cease operations. Members of the Pakistan Carpet Manufacturers and Exporters Association, led by Shahid Hassan Sheikh, conveyed their concerns during a recent visit to the Lahore Chamber of Commerce and Industry.

They argued that incorporating exporters into the standard tax framework, as outlined in the budget, would severely jeopardize their viability. Rather than supporting the export sector, they claimed, the government’s actions are exacerbating their challenges.

The association emphasized that subjecting exporters to regular taxes would diminish their earnings, reduce foreign currency inflows, and contribute to heightened inflation. They also voiced fears that Pakistani exporters might relocate to countries such as the UAE, which offer more favorable business conditions like Special Economic Zones.

Demanding export-friendly policies, they urged for the implementation of a stable five-year export strategy that remains unaffected by future budget revisions.

Critically, the association criticized the government’s decision to increase the financing rate for exporters from 3% to 19%, labeling it impractical. They also lamented the withdrawal of crucial benefits like Duty Drawback of Local Taxes and Levies and overdue payments dating back four years.

Regarding impending changes in fixed tax facilities, an association member condemned the move as unjust and unacceptable. They further called for renegotiations with Independent Power Producers (IPPs) to lower electricity costs, reductions in gas prices, and the restoration of other export subsidies.

Kashif Anwar, President of LCCI, acknowledged the challenges faced by exporters due to currency devaluation and rising energy expenses over the past three years. Despite these obstacles, he highlighted that robust government policies and exporters’ diligence had boosted Pakistan’s exports to $30 billion. However, he cautioned that withdrawing crucial support measures could precipitate a decline in export volumes.

Anwar expressed optimism for a prompt resolution to the issue, stressing that while they support fair taxation, abrupt changes to established tax policies should be avoided.