ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Thursday approved disbursement of monthly subsidy to Utility Stores Corporation (USC) at higher rate per household and turnover tax at 1.25 per cent on USC.

A meeting of the ECC, presided over by Finance Minister Muhammad Aurangzeb, also approved another request of Ministry of Industries & Production to declare Warehousing and Logistic Sector as an industry.

The meeting was told that an amount of Rs60 billion had been allocated in the budget for 2024-25 including Rs50bn under PM’s relief package and Rs10bn under Ramazan relief package. In recent weeks, the prices of some essential kitchen items had declined in the open market but stayed higher at Utility Stores Corpora­tion (USC). But generally, the prices of essential items, particularly those subsidised through USC, had gone up.

As the amount of subsidy is to be utilised to provide relief to poor segments of the society mapped through Benazir Income Support Program­me (BISP) data, five essential items have been provisioned for targeted population up to PMT-40 (Proxy Mean Test) registered with BISP on subsidised rates.

The subsidy per household was Rs2,734 per month for 2023-24. The proposed revised subsidy for 2024-25 is Rs3,650 per month with the increased amount of Rs916 per month or 25.09pc increase in overall subsidy per household.

This required adjustments in retail rates at USC. The Ministry of Industries and Production proposed that the Prime Minister’s Relief Package for FY25 for 10 months from Aug 1, to June 30, 2025 (excluding the month of Ramazan) should be released by the Ministry of Finance on a monthly basis. It also sought approval of PM Relief Package on Existing Targeted Subsidy (PMT-40) with proposed revised price and subsidy and continuation of Prime Minister’s Relief Package till July 31 as per subsidy utilisation or till approval of proposed package on Existing Targeted Subsidy Model and prices.

It also suggested payment of turnover tax of 1.25pc on subsidy to the Federal Board of Revenue (FBR) from the budgeted amount of subsidy for FY25, meaning by that subsidy allocated for the poor should also be used for payment of taxes to FBR.

The ECC “approved the proposal presented by the Industries & Production Division to continue the Prime Minister’s Relief Package for FY25 through Utility Stores Corporation with revised price and subsidy”, said a brief statement.

Taxation policies

Separately, briefing the National Assembly Standing Committee on Industries and Production on Thursday on the operations of Utility Stores Corporation (USC), its managing director expressed concern over taxation policies of the government, saying the FBR currently imposes taxes based on the buying price of commodities. He was of the opinion that taxation should instead be based on the subsidised price at which these goods are sold to the public.

The committee took up the issue seriously, and decided to call the FBR chairman to its next meeting. The USC official said the corporation remains committed in providing the public with quality commodities purchased exclusively from reputable, branded companies.

Published in Dawn, August 16th, 2024