KARACHI: Already hard-pressed amid surging prices of almost all essentials, the government on Wednesday added fuel to consumers’ misery by increasing the General Sales Tax (GST) to 18 per cent from 17pc along with federal excise duty.

However, the manufacturers have yet to give any respite in prices despite over Rs11 recovery in the rupee’s value, which makes the import cost of raw materials and finished goods cheaper.

Pakistan Vanaspati Manufacturers Association General Secretary Umer Islam Khan estimated a jump of Rs3 to Rs5 per kg/litre in ghee and cooking prices after the GST hike.

He said commercial banks are still showing reluctance in opening letters of credit (LCs) for importing edible oils. Usually, shipments take around 45-60 days to arrive at Karachi ports after the opening of LCs.

“If this situation persists the industry would be unable to meet the demand for ghee/cooking oil in Ramazan,” he warned.

Costly steel and cement

Agha Steel Industries also raised the price of steel bars of 16-32mm and 10-12mm sizes to Rs304,000 and Rs306,000 from Rs300,000 and Rs302,000 citing a hike in GST.

Naveena Steel Mills has issued new prices of Rs305,500 (16-32mm) and Rs307,500 (10-12mm) from Rs301,500 and Rs303,500.

A cement maker said that the combined impact of the rise of GST and FED to Rs2 from Rs1.5 per kg would push up the 50kg cement bag price by Rs38-40 per bag.

Korangi Association of Trade and Industry (KATI) President Faraz-ur-Rehman said the fresh taxation measures to appease the International Monetary Fund would further squeeze consumers’ buying power.

Bike prices raised

Automakers were quick to pass on the impact of new taxation measures. For example, Atlas Honda Ltd (AHL), the assembler of Honda bikes, increased the prices by Rs9,000-35,000 on Wednesday.

The new rate of CD70, CD70 Dream, Pridor, CG125, CG125 S, CB125F, CB150 F and CBI150F (silver) is Rs137,900, Rs147,500, Rs181,500, Rs205,900, Rs243,900, Rs330,900, Rs418,900 and Rs422,900.

The government will now collect Rs21,035-64,510 on different engine capacity bikes as compared to the previous rate of Rs18,729-56,361.

Cancer sticks

Meanwhile, the cigarette makers called upon the government to reconsider the proposed 153pc hike in the FED as it would give a boost to the illicit business of cancer sticks.

A spokesperson of Philip Morris Pakistan said the proposed tax hike if implemented would enhance the price of cigarettes by around 250pc.

“This will eventually lead to shortfalls in government revenue as the volumes will massively shift from the tax-paid sector to the non-tax-paid sector as often seen in the past,” he added.

Published in Dawn, February 16th, 2023