Govt urged not to impose new taxes on beverages

KARACHI: Karachi Chamber of Commerce & Industry (KCCI) former president and Businessmen Group (BMG) Chairman Siraj Kassam Teli has requested the government not to impose any additional taxes or federal excise duty (FED) on beverages and juices in the next budget, as it would lead to closure of the industry, shortfall in government’s revenue, and unemployment.

In a letter to Prime Minister Imran Khan, the BMG chairman, while referring to the ongoing buzz in the media regarding new taxes, including health tax and water surcharge, being imposed in the next budget on beverage industry, stated that this industry is already paying Rs100 billion to the national exchequer by way of output tax through FED and sales tax while the net revenue collection by the government comes to around Rs60 billion per annum which is apart from income tax, withholding taxes, super tax and other provincial taxes.

He pointed out that over the years, the beverage industry and its products have become a necessity of life as many Pakistanis do not have access to pure drinking water. This industry is providing them safe water produced with state of the art machinery, ensuring global hygienic standards, he added.

“We understand that the country is in dire need of additional revenue but one should realise that this new revenue must come from new sources and even if it is taken from old sources, then it needs to be justified according to their capacity to pay otherwise it may jeopardise the existing revenue,” Siraj Teli stressed, adding that the industry is already heavily taxed and if more burden is imposed, its growth, which declined in the first quarter, may suffer more.

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He noted that the cost of doing business has already gone up due to a hike in import/regulatory duties and dollar rate etc. “As this industry produces consumer products, more burden will be passed on to the customers.”

The BMG chairman cautioned that the imposition of new taxes may lead to the closure of the industry, adding that it would also hamper the prime minister’s efforts to bring more foreign investment to Pakistan.

“Any proposal to increase taxes will reverse the growth, ultimately reducing the revenue already being achieved from the beverage industry and above all high taxes are an incentive for evasion,” he stated.

Siraj Teli admitted that “today’s policy is actually shrinking the economy”, urging the government to impose a complete ban for one or two years on luxury items such as cars etc.

“Controlling inflation by increasing interest rates has a negative impact on new investment and industry. The solution lies in more industrialization only,” he maintained.

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