Tax cuts to curtail prices

Published May 11, 2008

KARACHI: Retailers and wholesalers are seeking a cut in duties and taxes as they say that it is now the only way to bring down prices when all other options to stem inflation have virtually failed.

They said that the successive governments have literally failed to check hoarding, profiteering and smuggling of essential commodities.

All price checking campaigns launched earlier failed miserably as these were started without taking into consideration the stock position of imported items, actual crop size, demand and supply gap, etc.

Retailers remained the main target during price checking drives while prices were not controlled at wholesale and producers’ level.

Dalda Foods Director Inam Bari said the government is eating up Rs30 per kg in terms of import duty on palm olien, 17-18 per cent in terms of general sales tax and income tax.

“There is either no GST or a maximum six per cent in various countries. The government should consider bringing it down to zero-rated which will make a direct impact on prices, with a reduction of Rs15-20 per kg,” he said.

An amount of Rs9,000 per ton customs duty is earned by the government on import of palm olien. In other countries, it is on the lower side, he said, adding that customs duty can be adjusted.

Pakistan Vanaspati Manufacturers Association (PVMA), he said, had taken up this issue several times, but it seems that the government cannot afford to lose big revenue from edible oil industry.

The price of five litre/kg Dalda ghee and tin has surged to Rs720-750 as compared to Rs395 in September 2006 owing to rising prices of palm olein in Malaysia and Indonesia.

Karachi Retail Grocers Group General Secretary Farid Qureishi said the only way to provide relief in prices is to cut taxes and duties, especially the GST.

He added that no serious effort had been made to check smuggling and hoarding.

Karachi Wholesalers’ Grocers Group Chairman Anis Majeed said the government officials had always given divergent statements about crop sizes of wheat, rice, pulses, sugarcane which created a confusion in markets.

He said till today wheat and flour smuggling had been going on and no concrete steps have been taken.

The government should procure wheat from farmers and provide it to millers at the procurement rate with no quota system.

By doing this, there will be no possibility of stock-piling by the hoarders, he was of the view.

This year the wheat crop is 21.8 million tons and consumption is about 22.5 million tons, which means there would be no major shortage, but the country may need only one million tons.

The government has decided to import 1.5 million tons of wheat which is good, but the government should buy wheat when it lands from Australia or Canada, as at that time prices would be reasonable.

As far as rice is concerned, Pakistan has its own crop of about 5.5 million tons and our maximum consumption is about 2.5 million tons; therefore, we have sufficient stocks for export. It should not be banned, but we have to regulate prices by putting a regulatory duty on export.—ASK

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