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Chain stores resist GST hike


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The proposed finance bill aimed at raising the general sales tax (GST) from 17% to 18% has drawn sharp criticism from the Chain Stores Association of Pakistan (CAP). The association has announced its resistance to the International Monetary Fund (IMF) pressure, stating that the new taxation measures are destructive and will add to the misery of traders already coping with a serious financial crisis. CAP Chairman Rana Tariq Mehboob has warned that the new taxation measures will jolt the very basis of trade and industry, clamp down on the purchasing power of consumers, and ultimately hit the manufacturing sector hard.


Mehboob has emphasized that it will be better if the government takes measures to expand the tax net instead of introducing new taxes for the already taxed segments of society. He has explained that the price of petroleum has already smashed the middle and lower classes, and it has become a tradition for the government to axe its handful of taxpayers instead of expanding its tax net. Mehboob has also highlighted that only tier-one retailers are paying taxes, which has robbed the formal sector of competitiveness and a level playing field.


Mehboob has warned that under the domino effect of dollarization, the skyrocketing inflation, which is already in the midst of a decade-high level, along with the unprecedented rupee depreciation, high energy tariffs, escalating mark-up rate, rising commodity prices, fluctuating exchange rate, and balance-of-payment crisis, will lead to a further hike in headline inflation, taking a toll on the local economy. Due to serious imbalances, Pakistan cannot afford to roll out monetary and fiscal policies to achieve the economic growth rate of over 4% it had predicted earlier for FY 2023-24.


Mehboob has demanded the government come up with long-term sustainable economic policies to address the energy rates and the effect of reduced market times, which have added to the miseries of traders. He has emphasized that the current economic situation calls for a strategic approach to expand the tax net, rather than burdening the already taxed segments of society with additional taxes.


Commenting on the levy collected on the point sales, Mehboob has noted that nothing is being returned as had been pledged by the government. He has proposed to stop charging consumers if the return is not assured and demanded the ease of raw material imports to facilitate the growth of local industries.


The stance taken by the Chain Stores Association of Pakistan reflects the concerns of traders and manufacturers who are struggling to cope with the economic challenges posed by the ongoing crisis. The proposed increase in the GST rate would further reduce the purchasing power of consumers and affect the competitiveness of the formal sector, which is already struggling to compete with the informal sector.


To achieve sustainable economic growth, the government needs to focus on expanding the tax net, improving the ease of doing business, and reducing the burden of taxes on already-taxed segments of society. Additionally, it is crucial to address the energy crisis and reduce the cost of doing business to encourage investment and job creation in the country.


In conclusion, the proposed increase in the GST rate has drawn sharp criticism from the Chain Stores Association of Pakistan, which has warned of its damaging impact on trade and industry. The government must take steps to address the concerns of traders and manufacturers and work towards implementing long-term sustainable economic policies to revive the local economy.

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