Government urged to cut duty, sales tax on stationery

KARACHI (May 15 2003) : Claims that the Pakistan government is education-friendly and is doing everything in its power to promote the spread of education in the country appear to be merely 'lip-service' while apparently very little is being done in the fiscal and commercial spheres which could bring down the cost of basic educational requisites like pens, pencils, markers, erasers, exercise books, etc.

The Writing Instruments Manufacturers Group of Pakistan (WIMGP) has been desperately trying, for years now, to get the government to rationalise sales tax and customs levies and also take effective measures to check smuggling, but to no avail.

The Sixth Schedule has exempted sales tax on books but essential educational stationery items like pens, pencils, markers, etc are subject to the exorbitantly high sales tax rate of 18 percent.

Textbooks are purchased once in a year, whereas the stationery items are consumables which the parents have to purchase all the year long, and such a high sales tax rate is, indeed, a disincentive for those in the lower income brackets to educate their children as recurring purchases of stationery consumables are often beyond their means.

Likewise, customs duty on components used in the manufacture of stationery items is 10 percent.

The paradox is that customs duty on components used in the manufacture of luxuries such as television sets, VCRs, DVDs, etc, is levied at 5 percent only.

It appears that the officials and functionaries in Islamabad are more interested in facilitating people to see TV programmes and movies on VCRs and DVDs than in pursuing education.

On the issue of sales tax and other levies, the CBR perennial argument is that it cannot give concessions to stationery items because they have simultaneous commercial use.

This appears to be mere eyewash since the CBR has totally exempted computers from sales tax in the interest of IT education and use, very conveniently forgetting that hardly one percent of computers are used by educational institutions while over 99 percent of their use is for commercial purposes.

The CBR also fails to see and realise that by keeping basic educational requisites costly it encourages illiteracy, and an illiterate population would never be computer savvy.

Thus, through its stubbornness in not relenting to help ease costs of educational requisites, in a way, the tax officials are covertly hindering and frustrating the government's avowed aim of promoting information technology.

The Writing Instruments Manufacturers Group of Pakistan has urged the finance minister to address the issue of sales tax and customs duty on stationery and components used in the manufacture of stationery items and, at least, rationalise the rates of these levies in the forthcoming budget if these cannot be abolished.

In their pre-budget proposals, they have pointed out that stationery items, despite being value-added, were not specified in the last budget's Part I of the Eighth Schedule to the IT Ordinance, thereby, unnecessarily attracting the highest rate of income tax on gross export proceeds.

The Group has demanded that this irritant be addressed through specifying stationery items along with the other value-added manufactured items in the forthcoming Eighth Schedule so that the export of stationery items does not attract more than the nominal rate of 0.75 percent.

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