Pakistan's budget for 2014-15 has raised customs duty from five to 15 per cent on import of different kinds of dyes, including sulphur dyes, vat dyes, disperse dyes and solvent dyes. A five to ten per cent duty on white oil has been imposed, with a one percent duty on indigo blue and basic dyes used by the local chemicals industry and commercial importers. The Pakistan Chemicals & Dyes Merchants Association wants the removal of these anomalies from the budget particularly, the sudden jump in customs tariff on import of dyes from 5 to 15 per cent. The association has informed the finance minister that this abrupt increase will hurt export-oriented textile industries. The addition to manufacturing cost will hit the industry’s competitiveness in the international market.

The association says white oil is routinely smuggled through Iran. If the duty were to be increased to 10 per cent and not reduced to 5 per cent, smuggling would increase and the national exchequer would suffer huge losses in terms of customs duty, sales tax and other levies.

The budget imposes a difference of 15 per cent sales tax applicable on the same goods. It is feared this would create a huge opportunity for dishonest and fraudulent elements to show excessive consumption in units which enjoy a 2 per cent tax rate facility, thereby pushing honest commercial importers completely out of business.