Pakistan government being pressurized to reinstate fixed tax regime

Pakistan government being pressurized to reinstate fixed tax regime

By: Communicators - Business Team (July 19, 2024)

Fruit and vegetable exporters have called on the federal government to reinstate the fixed tax regime, which they believe is crucial for supporting farmers and ensuring food security. This regime would provide more predictable financial conditions for exporters and farmers, potentially stabilizing prices and improving the agricultural sector's overall productivity and resilience. Reinstating the fixed tax regime could help mitigate the uncertainties and financial burdens currently faced by farmers and exporters, thereby fostering a more robust agricultural economy and contributing to the nation's food security

Pakistan Fruit & Vegetable Exporters, Importers and Merchants Association (PFVA) has highlighted issues, being faced by the fruit and vegetable exporters and also proposed its solution to enhance the exports. It has been pointed out that the supply chain of Fruits and Vegetables is highly disorganized and exporters purchase Fruits & Vegetables from third parties, which mainly don’t even have their bank account. In addition, the growers, mostly smaller having agriculture land up to 25 acres don’t have bank accounts.

Exporters have to pay to the growers through cash cheque, which either they get enchased themselves or pass on to someone to whom they owe payments. While, the thousands of contractual and seasonal labour, engaged for packing the export consignments of orange, mango, onion & potato, are also paid wages in cash. In this situation it would be impossible for the exporters to provide money trail, while submitting Income Tax returns. Therefore, PFVA has proposed that a new 'advance tax' shall be abolished and the fixed tax regime shall continue to support the export sector. R&D is the need of hours but totally ignored in the budget. Pakistan’s orange exports significantly dropped from $220 million to $110 million. Sufficient funds are required for R&D to develop new varieties like seedless oranges, improve quality and enhance the per acre yield production. 

Change of climate is emerging as big challenge for the export sector and has already impacted on production of orange and mango and thus food security will assume a national issue in near future if serious efforts are not made right now. As a result of this impact, farmers will not be able to get good prices for their efforts and thus they may lose the interest in growing fruits and vegetables leading to deepening issues of food security. It is therefore imperative to have some funds in the budget for climate change. 

Fruits & Vegetables sector has shown good progress by enhancing its exports and strongly anticipates multiplying the existing export volume to manifolds provided the government restore the fixed tax regime for the exports sector and allocate sufficient funds for R&D. The export of this sector may drop significantly if the suggestions given by the exporters are not taken seriously and prompt action initiated accordingly.

PFVA has urged to take these issues on high priority and initiate necessary actions for future growth of this sector having tremendous export potential.