Industry asks govt. to freeze GST on tractor at 5pc for one year more

LAHORE: The Pakistan Association of Automotive Parts & Accessories Manufacturers, in a letter written to Deputy Prime Minister Ch Pervaiz Elahi, has asked the government to extend the reduced levy of 5 per cent on tractors sale for another year with a view to sustain manufacturing growth, which is under serious threat of closure due to gas supply suspension on one hand and long hours unannounced power load shedding on the other in Punjab.

PAAPAM Vice Chairman Usman Malik said that the reduction of sales tax to 5 per cent put the tractor industry and its allied hundreds of vending units across the country back on track, bringing tractor rates in the reach of small landholders a step forward in farm mechanization, maximizing per acre yield.

He said that auto industry is again facing a steep decline in production and any change in Sales Tax regime at this point may backfire, leading to closure of industry.

Auto industry appreciates the senior industry minister for continued support for automotive vendors, as on his personal persuasion, the government agreed to reduce sales tax to 5 per cent from 16 per cent, he added.

Referring to the promise of Deputy PM at the PAAPAM annual dinner, Mr. Usman Malik urged him to fulfil the commitment of continuing fair support to industry by freezing the levy on same level of 5 per cent for another year.

He said that last year’s decision of government not only facilitated the tractor manufacturers and vendors attached with this sector but also gave a boost to agriculture sector.

The PAAPAM leader said the reduced GST would continue to increase the sale of tractors and ease the problems being faced by the tractor manufacturers and the farming community, as after the imposition of 16 per cent GST last year, huge decline in tractors sale were seen.

After this decision thousands of employees and their families attached with this sector could also get benefit, he added.

He said that availability of tractors at cheaper prices would also help increase the production of agriculture in the country.

Quoting the figures of last year, PAAPAM vice chairman observed that after cut in tractor production, about 28,000 workers had been rendered jobless while 600 parts vendors stopped their work.

According to him, 95 percent tractor parts are locally made, but tractor production was reduced to 25 per cent after levy of 16 percent general sales tax.

Without the sales tax, the local industry would produce 80,000 to 100,000 tractors that would ensure jobs for 68,000 workers, besides increasing mechanization of agricultural farms, the PAPAAM vice chairman said.