Uncertainty regarding taxes brings market activities to halt
Prevailing uncertainty regarding imposition of taxes has brought market activities to a halt, as market sources are of the view that small and medium traders are clueless and totally blank with regard to new tax regime. Major retail chains have some idea how to deal with tax issues while majority of small and medium traders would again be exposed to coercive measures of tax machinery, leading to rampant corruption, they added.
They said it would not be easy for manufacturers to collect 7.5 percent withholding tax from retailers, and manufacturers would not be in a position to carry inventories in case retailers stop procuring goods for another two to three months.
According to tax experts, excise duty has been posed on the basis of electricity load on steel re-rolling mills and new scheme of things suggest that the department has declared that production of one ton capacity would be assumed on electricity consumption of 110 kWh.
Meanwhile, old steel re-rolling mills are producing one ton against the consumption of 160kWh. This discrepancy has not been addressed in the finance bill that would enhance the cost of doing business for such mills, they said.
Also, some other circles are of the view that the situation could be worsened further in case Pak rupee is depreciated further against the US dollar. It would lead to further uncertainty, they feared. They said the export figures are already dwindling down, which are down by 8 percent in dollar terms in June 2019.
They have expressed similar worries about drop in imports; saying that this reduction in imports is due to low consumption. But it would revise upward soon the uncertainty relating to currency devaluation is over. Until then, they said the local manufacturers would increase prices of their products without improving quality.
They said the latest statistics suggest that imports of rubber and tyre are down by 50 percent, which means that local auto market is sluggish. But it would be revived soon local market is stable.
Similarly, they said, the government has recently imposed 50 percent regulatory duty on juices and 60 percent on cheese and exposed consumers to local low quality juice manufacturers. There is no quality control on manufacturing of goods in the country, they pointed out.