Businessmen oppose sales tax on seed industry

Businessmen oppose sales tax on seed industry

Businessmen oppose sales tax on seed industry
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LAHORE: The unjustified move of levying sales tax on the seed industry will negatively impact crop yield by slowing down the process of hybridisation, businessmen said in a statement.

“The levy of 17 per cent general sales tax (GST) on locally produced or imported seed coupled with 3 per cent additional tax on unregistered seed firms will have a cumulative effect of 25 per cent,” Pakistan Hi-tech Hybrid Seed Association (PHHSA) President Shahzad Ali Malik said.

“The manufacturers and importers will pass on the additional cost to the growers. As such it will increase input cost and endanger national food security. It will also hurt research and development efforts in the agriculture sector,” he added.

Rice Exporters Association (Reap) Chairman Ali Hussam Asghar, PHHSA Senior Vice President Dr Shafiqur Rehman and other office bearers were also present.

Malik said that the PHHSA, Reap and All Pakistan Textile Mills Association (Aptma) have joined hands for lobbying against the imposition of sales tax.

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“A representative delegation of all the three associations will meet Federal Finance Minister Shaukat Tarin, Adviser to Prime Minister on Commerce Abdul Razak Dawood, Minister for National Food Security Fakhar Imam and Federal Board of Revenue (FBR) chairman to inform them that the taxes will negatively impact the agriculture sector,” he added.

He feared that the taxation would lead to a drop in the total tax collection because the farming community would abandon the certified seed and turn towards informal sources for meeting their requirements which would ultimately result in reduced per acre agriculture output.

He said that the government was advocating for adopting the Chinese model, which succeeded on the basis of cheap hybrid wheat, rice and cotton seeds, while in contrast the government is taxing and dis-incentivising the seed industry.

Malik suggested that the government should at least exempt the local seed developers from the sales tax and impose it only on the seed importers, for encouraging the transfer of hybrid seed technology and local production of seeds.

Reap Chairman Ali Hussam Asghar assured the seed industry that the Aptma had also been taken on board and it would be part of the lobbying against the imposition of the sales tax on seeds.

The country was able to increase its rice production from around 4.83 million tonnes to 8.14 million tonnes in a decade through hybrid seed, which made available export surplus and rice exports shot up from a mere $300 million to over $2.3 billion, he said.

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“For exporting more we need to grow more and for the purpose promotion of hi-tech hybrid seeds is a must and the government should exempt the whole seed industry, including importers, from the GST,” Asghar added.

Dr Shafiqur Rehman said that the hybrid maize is another success story in the country as locally developed seeds of the crop increased per acre yield from 47 to 60 mounds per acre.

The local seed companies are taking care of the smallholders as the poultry sector is developing at an annual rate of 12 per cent and needs more maize production, he said, further warning that the country would need to import maize next year if the local production failed to achieve the 8 million tonnes target.

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