Footwear makers oppose plan to place sector under Third Schedule

LAHORE: Pakistan's footwear industry has objected to a proposal in the Finance Bill 2026 to bring the sector under the Third Schedule, warning that the move could hurt formal businesses and complicate tax compliance.

At a press conference held at the Lahore Chamber of Commerce and Industry, Pakistan Footwear Manufacturers Association Chairman Rashad Islam and former chairman Mansoor Ahsan Sheikh said the industry backs documentation, taxation and revenue collection, but argued that policy design must reflect how the sector operates. They said the association was not seeking tax exemptions, but a system it considers workable and fair for compliant businesses.

Islam said the proposed change could create serious operational problems for manufacturers and retailers and may undermine efforts to expand the documented economy. He also said the footwear sector is one of Pakistan's most labour-intensive industries and could face added pressure if the proposal is implemented.

Speaking at the briefing, the PFMA chairman said the documented segment of the industry is already paying taxes, investing in production and retail facilities, and creating jobs. He warned that additional burdens could divert buyers to undocumented channels, increasing informality and reducing tax collection instead of broadening the tax base.

"The footwear industry supports documentation and national revenue generation. However, placing the sector under the Third Schedule may unintentionally push business back towards the undocumented economy instead of expanding the tax base," he said.