KARACHI, March 10: Retailers lost no time in pushing up the rate of sugar from Rs65 to Rs70 a kilo on Thursday amid media reports about an expected increase in sales tax on sugar to 17 per cent from 8.5 per cent, blaming wholesalers for increasing the rate at Jodia Bazaar.

While whenever the wholesale rate of sugar falls the retailers take one or two weeks to pass on the impact to the consumers, many retailers who had unsold stocks of sugar that they had purchased at old rates made windfall profits.

Speaking to Dawn, Karachi Wholesalers Grocers Association (KWAG) Chairman Anis Majeed said that the wholesale rate of one-kilo sugar increased from Rs62.50 on Wednesday to Rs65 on Thursday morning.

But there was no sizeable trading at this rate, which finally settled at Rs64 in the evening, he claimed.

The rate was Rs61.50 earlier this week, he added.

He said the reports that the government would withdraw 50 per cent exemption in the rate of general sales tax on sugar under an IMF condition caused a stir in sugar price.

Mr Majeed said the government with the help of sugar millers had set a benchmark of charging Rs2.38 per kilo as sales tax on the ex-mill rate of Rs28 a kilo.

With the proposed rise in GST to 17 per cent, tax on ex-mill rate would rise to Rs4.76 per kg, he added.

Market reports indicate that the federal board of revenue will send a summary to the economic coordination committee for consideration regarding approval to withdraw 50 per cent exemption in the rate of sales tax on sugar.

If the price hike by wholesalers and retailers remain unchecked, consumers will be compelled to pay even more after the final decision on GST increase is taken by the government.

Karachi Retail Grocers Group General Secretary Farid Qureishi told Dawn that actually wholesalers had increased the rate to Rs68 and Rs70 in the morning session at Jodia Bazaar but the rate came down to Rs65 and Rs66 in the evening.

In reply to a question, he said that the retailers who purchased sugar at the increased rate on Thursday morning sold sugar at the rate of Rs70 a kilo.

But he did not give a clear answer as to why the retailers’ association took no action against those who instantly increased the price despite making no purchase on Thursday.

It is worth noting that Pakistan imported 1,013,659 tonnes of sugar ($673 million) in the July-January 2010-2011 period as compared to 264,537 tonnes ($137 million) in the same period of the last financial year.

A sugar dealer said that the Trading Corporation of Pakistan (TCP) had an unsold sugar stock of 350,000 tonnes. The TCP usually released around 50,000 tonnes to the utility stores corporation every month, he added.

He said many retailers and industry people had lifted the stocks at Jodia Bazaar at Rs64 and Rs65 after the reports of an expected GST rise.

He added that the present ex-mill rate of sugar was Rs61.70 a kilo.

The dealer said that Sindh produced 950,000 tonnes of sugar between November 2010 and February 2011.