Latest news with #GeneralSalesTax
Business Recorder
2 hours ago
- Business
- Business Recorder
FPCCI opposes new taxes in budget
KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Vice President Muhammad Aman Paracha has voiced strong opposition to reports of new taxes being imposed on existing taxpayers in the upcoming federal budget for the fiscal year 2025-26. The organization has urged the government to refrain from introducing new taxes on imports, exports, and other sectors in order to promote national trade, industrial growth, and to encourage new investments. The FPCCI warned that if the government imposes additional taxes under pressure from the IMF, the FPCCI will actively oppose such measures. FPCCI Vice President Muhammad Aman Paracha emphasized the need to separate tax policy from tax administration to avoid conflicts of interest. He further suggested that the budget-making process should not be treated merely as a routine financial exercise but should be transformed into a strategic economic tool. Aman Paracha stressed the importance of expanding the tax net to include all untaxed and under-taxed sectors, noting that imposing additional taxes on those who are already compliant would have adverse effects. He highlighted that business activity is already sluggish and the business community is struggling to stay afloat. Imposing further tax burdens on existing taxpayers could lead to decreased revenue collection as it would open more avenues for tax evasion. He also expressed concerns over amendments introduced through Ordinance IV of 2025, particularly Sections 138(3A), 140(6A), and 175C, stating that these amendments grant excessive powers to tax authorities and violate Articles 4, 18, and 77 of the Constitution. He warned that such changes would significantly erode investor confidence. Paracha proposed the development of a harmonized structure for General Sales Tax (GST), featuring a unified compliance portal. He recommended gradually reducing the GST rate to 12% to lower business costs for the formal sector and stimulates economic growth. He also called for comprehensive reforms in Pakistan Customs, identifying outdated laws, tariff segmentation, under-invoicing, and weak enforcement as major challenges. He underscored the need for economic policy to strike a balance between revenue requirements and industrial development, especially through measures that boost Pakistan's export potential and attract investors. Finally, Muhammad Amaan Paracha appealed to Prime Minister Shehbaz Sharif to immediately release the long-pending Rs23 billion subsidies related to additional electricity consumption and ensure that funds for this are allocated in the upcoming 2025-26 federal budget. Copyright Business Recorder, 2025
Business Recorder
a day ago
- Business
- Business Recorder
Weekly Cotton Review: Prices steady, trading activity subdued
KARACHI: The cotton market is showing stability in prices, though trading activity remains subdued. New crop deals for the 2025-26 seasons are being finalized between Rs. 17,200 to Rs. 17,500 per maund, while phutti (seed cotton) is trading at Rs. 8,000 to Rs. 8,500 per 40 kg. According to industry sources, approximately 2,200 bales of the new crop have already arrived at ginning factories across the country. Currently, three ginning factories in Sindh and four in Punjab are partially operational. Market participants anticipate a significant uptick in trading after Eid-ul-Adha. Punjab's Secretary of Agriculture, Iftikhar Ali Soho, reported that the province has achieved 94% of its cotton cultivation target for the current season. Meanwhile, the textile industry has renewed its demand for the abolition of the Export Facilitation Scheme (EFS) and the removal of the 18% sales tax on locally produced cotton. Additionally, calls for eliminating the General Sales Tax (GST) persist, with expectations that the issue may be addressed in the upcoming budget. The Pakistan Cotton Ginners Association (PCGA) and the All Pakistan Textile Mills Association (APTMA) have jointly urged the government to scrap the EFS and abolish the 18% sales tax on domestic cotton. Chairman of the Cotton Ginners Forum (CGF), Ihsan-ul-Haq, warned that the entire cotton sector is grappling with the worst economic crisis in the country's history, stressing the need for immediate policy interventions to revive the industry. During the past week, the local cotton market saw stable prices for cotton. Trading remained limited as the partial arrival of the new cotton crop has begun. Currently, three ginning factories in Sindh province are partially operational, while four ginning factories in Punjab province have also partially started ginning. Partial arrival of phutti (seed cotton) from the lower regions of Sindh has commenced, with approximately 2,200 bales of phutti having reached ginning factories so far. Increased trading activity is expected after Eid-ul-Adha. The government has set a production target of one crore eighteen lakh bales for the new 2025-26 season. Currently, trading in the ongoing season is slow, with cotton prices ranging between 15,000 to 17,500 rupees per maund. Most transactions are being conducted on credit, with deals based on quality and payment conditions. The stock of cotton with ginners is gradually decreasing. Federal Minister for Trade Jam Kamal Khan has stated that the government is seriously working to eliminate the 18% general sales tax on local cotton in order to boost cotton production. He shared this during a press conference on Monday. The PHMA (Pakistan Hosiery Manufacturers Association) has urged the government to reduce electricity tariffs during peak hours to promote exports. In Sindh and Punjab provinces, cotton trading took place between 15,000 to 17,500 rupees per maund, depending on quality and payment conditions. New crop transactions were recorded at 17,000 to 17,500 rupees per maund, while phutti (seed cotton) was sold at 8,000 to 8,800 rupees per 40 kg. The Karachi Cotton Association's Spot Rate Committee maintained the spot rate stable at 16,700 rupees per maund. Naseem Usman, Chairman of the Karachi Cotton Brokers Forum, said that international cotton prices are experiencing fluctuations. New York cotton prices showed a mixed trend, with futures trading between 65.50 to 69 cents. According to the USDA's weekly export and sales report, 118,700 bales were sold for the year 2024-25. Vietnam remained at the top by purchasing 65,600 bales. Bangladesh secured the second position by buying 17,300 bales, while Turkey ranked third with 12,400 bales. For the year 2025-26, 13,800 bales were sold. Pakistan led the purchases with 7,600 bales, followed by Thailand in second place with 3,500 bales, and Peru in third place with 2,600 bales. Meanwhile, Punjab Agriculture Secretary Iftikhar Ali Sahu has informed the Business Club that cotton cultivation has been completed on over 33 lakh acres in Punjab, and the province has achieved 94% of the set target. He stated this while presiding over a high-level review meeting on the current situation of cotton. Punjab Agriculture Secretary Iftikhar Ali Sahu said that a unique and successful tradition has been established to improve cotton production through phased cultivation. Pakistan's cotton sector is facing its gravest financial crisis in decades, prompting swift government attention after urgent appeals from the Pakistan Cotton Ginners Association (PCGA) and the All Pakistan Textile Mills Association (Aptma). Both associations have launched a high-profile lobbying campaign, writing to Prime Minister Shehbaz Sharif and initiating a nationwide media blitz, demanding the immediate abolition of the Export Facilitation Scheme (EFS) or the removal of sales tax on domestically produced cotton and its by-products. The premier subsequently sought policy recommendations from the Ministry of National Food Security and Research (MNFSR). In response, the ministry has formally endorsed the industry's proposals. In a letter to PCGA President Dr Jassu Mal, Cotton Commissioner Dr Khadim Hussain stated that the government has recommended that the 18pc sales tax on domestic cotton, cottonseed, oilcake, and cottonseed oil be lifted immediately, or that imports of cotton, yarn, and grey cloth be taxed at the same rate. The ministry's recommendations, forwarded to safeguard farmers' incomes, revive local production, and stem Pakistan's soaring dependence on costly cotton imports, it says. The communiqué notes that Punjab has implemented targeted subsidies for farmers to increase their incomes and reduce production costs for various crops. Industry data reveals that textile mills have imported over 300 million kgs of cotton yarn and two million bales of cotton during the first nine months of 2024-25, draining billions of dollars in foreign exchange. Despite this, domestic production has fallen to a historic low of just 5.5m bales. Meanwhile, more than 200,000 bales of unsold cotton and vast stocks of yarn remain idle in factories, with demand at a standstill. Cotton Ginners Forum Chairman Ihsanul Haq says the fallout has been devastating as over 800 ginning units and 120 spinning mills have ceased to function, while hundreds more textile units are barely functioning. 'If the current policy persists, the sector risks total collapse,' he warns, adding that Pakistan may soon be forced to import not only cotton but also edible oil, compounding the country's financial woes. The MNFSR's recommendations underscore the urgency, recommending immediate tax relief for domestic producers or the imposition of equal taxes on imports to restore a level playing field. All eyes are now on the federal government, as the fate of Pakistan's cotton and textile industry hangs in the balance. Copyright Business Recorder, 2025
NDTV
26-05-2025
- Business
- NDTV
What World Bank Report Said On Rising Poverty In Pakistan
Islamabad: The General Sales Tax has the largest marginal contribution to the rise of poverty, while a monthly cash transfer programme to the poorest families has the largest positive impact on inequality reduction in Pakistan, a World Bank study has said. 'The Effects of Taxes and Transfers on Inequality and Poverty in Pakistan' reports that the General Sales Tax (GST) payments account for over 7 per cent households' pre-tax expenditure, which leads to further impoverishment among poor and vulnerable households. Dawn reported on Sunday, quoting the World Bank (WB) study that estimations of the marginal contributions of individual fiscal instruments - or the additional impact that individual fiscal instruments have on poverty or inequality when all other fiscal instruments are included - demonstrate that GST has the largest marginal contribution to the national poverty increase. The second-largest impact on inequality comes from pre-primary and primary education expenditures, the WB study said. It also reported that the Benazir Income Support Programme (BISP), which provides cash to the poorest families on a monthly basis, has the largest positive impact on inequality reduction. The BISP cash transfer demonstrates the largest marginal contribution to inequality reduction, it added. The study suggests that, while moving forward, Pakistan should improve its domestic revenue mobilisation and public expenditure efficiency to generate greater fiscal space. The additional fiscal space should be prioritised to expand social expenditure and targetted transfers and to improve fiscal equity. The report recommends expenditure reforms to improve the accessibility and quality of public health and education services in Pakistan, which could have long-term impacts in terms of poverty and inequality reduction. It also finds faults with the taxation system of the country, which it claimed emphasises revenue collection from "more frequently impoverishing indirect taxes as well as regressive and inefficient subsidy expenditures" while de-prioritising progressive direct taxation. The report further says that the most poor and vulnerable households are net payers into the fiscal system, meaning that benefits received are smaller in magnitude than taxes paid.
India.com
25-05-2025
- Business
- India.com
Why is Pakistan so poor? World Bank report makes shocking revelation, it says biggest reason is...
New Delhi: According to a World Bank study, the largest contributor to the increase in poverty in Pakistan is the General Sales Tax (GST), while the monthly cash transfer programme for the poorest families has the most positive impact on reducing inequality. The World Bank, in a report titled 'The Impact of Taxes and Transfers on Inequality and Poverty in Pakistan', stated that GST payments account for more than seven percent of the pre-tax expenditure of households, which leads to further poverty among poor and vulnerable families. The GST has the largest contribution to the increase in national poverty. 'Dawn' reported on Sunday, 25 May 2025 citing the World Bank study, that the estimated contribution of personal financial tools, or when all other financial instruments are included, shows that personal financial tools have an additional effect on poverty or inequality, indicating that GST's contribution to the increase in national poverty is the largest. The second largest impact on inequality comes from spending on preschool and primary education.
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Business Standard
25-05-2025
- Business
- Business Standard
GST largest marginal contributor to rising poverty in Pakistan: World Bank
The General Sales Tax has the largest marginal contribution to the rise of poverty while a monthly cash transfer programme to the poorest families has the largest positive impact on inequality reduction in Pakistan, a World Bank study has said. The Effects of Taxes and Transfers on Inequality and Poverty in Pakistan' reports that the General Sales Tax (GST) payments account for over 7 per cent households' pre-tax expenditure, which leads to further impoverishment among poor and vulnerable households. Dawn reported on Sunday quoting the World Bank (WB) study that estimations of the marginal contributions of individual fiscal instruments or the additional impact that individual fiscal instruments have on poverty or inequality when all other fiscal instruments are included demonstrate that GST has the largest marginal contribution to the national poverty increase. The second-largest impact on inequality comes from pre-primary and primary education expenditures, the WB study said. It also reported that the Benazir Income Support Programme (BISP), which provides cash to the poorest families on a monthly basis has the largest positive impact on inequality reduction. The BISP cash transfer demonstrates the largest marginal contribution to inequality reduction, it added. The study suggests that, while moving forward, Pakistan should improve its domestic revenue mobilisation and public expenditure efficiency to generate greater fiscal space. The additional fiscal space should be prioritised to expand social expenditure and targetted transfers and to improve fiscal equity. The report recommends expenditure reforms to improve the accessibility and quality of public health and education services in Pakistan, which could have long-term impacts in terms of poverty and inequality reduction. It also finds faults with the taxation system of the country, which it claimed emphasises revenue collection from more frequently impoverishing indirect taxes as well as regressive and inefficient subsidy expenditures while de-prioritising progressive direct taxation. The report further says that the most poor and vulnerable households are net payers into the fiscal system, meaning that benefits received are smaller in magnitude than taxes paid. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
