Muhammad Saleem

Inefficiencies in tax administration — from refund delays to policy instability — are affecting Pakistan’s trade performance, according to traders and exporters. Muhammad Latif, former chairman of the Textile Exporters Association, stressed the need for a business-friendly environment to fetch foreign exchange and create jobs. Talking to WealthPK, he said exporters were making payments regularly, as their exports are subjected to taxes.

“As soon as our documents are submitted, deductions are made immediately. Earlier it was 1%, but now it has increased to 2%,” he said. The government departments frequently conduct audits of exporters, while different types of scrutiny and assessments continue throughout the year. “We keep discussing tax rates and other issues with decision-makers, but the situation has not improved for industry,” he said.

Latif said that instead of supporting industries, the government often increases taxes on banks or other sectors, which directly harms industry. “Different taxes are imposed at every stage, and eventually these costs add up and fall onto the product itself, making it inevitably more expensive,” he said. “The high taxes and their complicated processes are creating issues for taxpayers and increasing the cost of products.

We need cheap energy, lower taxes and affordable raw material to compete internationally,” he said. Latif feels there's a general lack of attention to business concerns. Muzamal Sultan, former president of Faisalabad Chamber of Commerce and Industry (FCCI), told WealthPK that systemic inefficiencies are a major problem.   “The government’s claim of ensuring ease of doing business has proved hollow. The promises of cut in tax rates and lowered interest rates have not been honoured.

Almost 99% of the suggestions submitted by various chambers were ignored when the budget was presented,” Muzamal said. “The budget introduced some new and unusual measures, which the chambers across the country rejected,” he said. “The government also continues to claim it will increase exports and reduce imports. In reality, however, it has made importing vehicles easier while increasing duties and taxes on local vehicles, making them more expensive.

In this way, the government has encouraged imports and discouraged exports,” he explained. Besides, the former FCCI president said the government had also promised to provide electricity at nine cents per kilowatt hour and reduce gas prices, but instead, both electricity and gas prices have been increased. He added that the government had failed to expand the tax base to lessen the burden on existing taxpayers.

Credit: INP-WealthPk