950828

CAP resents

increase in

fixed tax, WT

RECORDER REPORT

LAHORE: Contractors Association of Pakistan (CAP) has shown their anguish over increase in fixed tax from three percent to five percent, and compulsory deduction of withholding tax of four percent which would "bulldoze the construction industry."

The association arranged a get-together in which contractors from all the provinces of the country participated.

The speakers were Khalid Rafiq, Engineer Zafarullah Khan, Fayyaz Ali Shah, Alim Khan, S.M. Ishaq Khan, President FPCWA and Mohammad Yousuf Sheikh, president Contractors Association of Pakistan.

They highlighted the need to form this association in view of very pressing problems which the contractors' community and the industry has been facing since long. This has been necessitated especially due to newly-introduced increase in income tax and withholding tax on contracts which were signed before the announcement of the budget.

The CAP also decided to take up at higher level the issue already presented at the PEC Seminar held on 23 August, 1995, chaired by Governor, Punjab, Raja Saroop Khan. Engr. Zafarullah Khan of CAP had highlighted these problems and was supported by PEC Chairman Ilahi Bux Soomro, Engr. Shamsul Mulik Chairman Wapda and Engr. Iftikhar Khalil MD Nespak. The whole house gave the approval of resolutions.

The major problems facing the constructions industry due to which its downfall is imminent are as:

a) increase in the fixed income tax from 3 percent to 5 percent on construction contracts announced in this budget, and b)notification for compulsory deduction of withholding tax from 2.5 percent to 4 percent by the contractor from supply of goods, labour, and services from his vendors and suppliers.

With the downfall of construction industry, the country's development will suffer irreparable loss. They thus emphasized and appealed to the government to take corrective actions, failing which not only the development activity will suffer but millions of people will become jobless. The country will also suffer in the total tax collection as the construction industry is the biggest contributer of taxes.

It was pointed out in the meeting that foreign contractors are making colossal profit from the contracts which can be conveniently executed by local contractors. But this poor country is throwing away the development funds to foreign contractors. In foreign countries, there are association of contractors who do not let such misuse of development funds take place.

It was unanimously agreed that all efforts will be made so as to ensure that the government removes the impediments created in the development of the construction industry of the country.

The meeting adopted following resolutions:

"The government should withdraw the increase announced in the recent budget. In the fixed income tax on construction contractors from 3 percent to 5 percent. The government should also withdraw the notification for compulsory deducction of 4 percent withholding tax by the contractor from payments of supply of goods, labour and services from his vendor and supplier.

"The government should withdraw the increase announced in the recent budget in the income tax on consultants from 3 percent to 5 percnet. The government may also be requested to withdraw the excise duty imposed in, recent budget, on the consultants.

"It is known that the arbitration clause provided in PEC contract documents, is being disagreed and deleted by the government. The government to maintain this clause in PEC documents".