The Pakistan Tanners Association (PTA) and the Lahore Hide Market Association has appealed the government, to keep leather sector away from the influence of Value Added Tax (VAT), after reviewing its impact on leather at various stages of industrial supply chain.
In this regard, Shaikh Muhammad Naim, Chairman, PTA Northern Zone said that, the value-addition chain of leather, breaks at certain levels hence, the effect of VAT cannot be transferred to the subsequent consumer.
Imposition of 15 percent tax at each level of value-addition, would of course amplify the working capital requirements, which would threaten the businesses of small and medium exporters.
This would subsequently increase the business cost by 70 percent, resulting into destruction of the leather industry, said Naim, according to whom, VAT would take its toll on the competitiveness of leather exports.
Both the associations have urged the government to stop seeking financial assistance from IMF and the World Bank, and prop up country's export-oriented sectors.