The Trading Corporation of Pakistan will obtain loans from banks to procure the sugar and interest rate will be paid by the provincial governments. PHOTO: REUTERS
Headed by Prime Minister Shahid Khaqan Abbasi, the Economic Coordination Committee (ECC) of the cabinet approved the procurement of 300,000 tons of sugar from the millers for exports. The Punjab government had pushed the proposal.
Sindh cabinet approves additional subsidy for sugar export
The ECC also introduced another phase of regulatory duties and imposed or increased the duty on 16 items that cover 54 tariff lines. It also reduced or abolished the duty on 14 items covering 81 tariff lines.
Sugar procurement
“The ECC approved a proposal for the procurement of 300,000 tons of sugar from the surplus stock of the mills, through a tendering process and to export the same through an international tendering process,” said a handout of the Prime Minister’s Office.
The step would enable the mills to procure sugarcane from the growers at the prescribed rate and ensure timely payments to the farmers, it added.
Politicians belonging to the Pakistan Peoples Party, Pakistan Muslim League-Nawaz (PML-N) and Pakistan Tehreek-e-Insaf (PTI) or their close relatives and friends own almost all the sugar mills in Pakistan.
The decision to procure sugar will give a minimum Rs15 billion benefit to the millers who are already swindling the farmers in Punjab and Sindh by paying them only Rs140 per 40 kilogramme of sugarcane.
The official rate of sugarcane is Rs180 per 40kg and PTI’s former MNA Jahangir Tareen and Shah Taj Sugar Mills are the only millers that are paying full price to the growers.
The total hit to the exchequer, both federal and provincial, will be at least Rs20.4 billion due to the cost of subsidy on sugar exports. This is in addition to the benefit of Rs30 billion that the sugar millers will avail by claiming Rs20 per kg subsidy on the export of 1.5 million tons.
The Trading Corporation of Pakistan will obtain bank loans to procure the sugar and the interest rate will be paid by the provincial governments.
Regulatory duty
The ECC levied regulatory duty on 11 items that cover 43 tariff lines. It imposed 3% duty on the import of all types of yarn, 5% on hats knitted or made-up lace and glass. Ten per cent duty was imposed on sheets and 5% on flat-rolled products of iron.
The ECC increased the duty on five items covering 43 tariff lines. The duty on imported meat was increased from 10% to 20%, PVC resin to 4%, woven fabric of synthetic filament yarn to 8%, caps 10% and float glasses 10%.
The ECC had earlier imposed the regulatory duty on hundreds of items to curb their import by declaring them non-essential. However, due to the public backlash, the government on Friday lowered the duty on six items covering 22 tariff lines and abolished on eight items covering 59 tariff lines.
Sindh millers to get Rs30 billion as subsidy on sugar export sanctioned
Other decisions
The ECC allowed export of two million tons of wheat at subsidised rates to clear the glut. Governments of Punjab and Sindh will export 1.5 million tons and 500,000 tons respectively including wheat products. The export of wheat and wheat products would be completed before June 30, 2018.
Tax exemptions
The ECC also approved numerous tax exemptions amid questions over the legality of such decisions. Under the Income Tax Ordinance of 2001, the ECC can grant tax exemptions only under certain circumstances. But most of the decisions taken on Friday did not fall in this category, said officials in the Federal Board of Revenue.
The ECC approved tax exemptions on the import of construction material for infrastructure projects of the National Highway Authority under the China-Pakistan Economic Corridor (CPEC).
This exemption would be applicable only to the construction of the Sukkur-Multan section of Peshawar to Karachi Motorway, it added.
The ECC approved exemption from the relending policy of the government for funds released to the State Bank of Pakistan for implementation of the Financial Inclusion and Infrastructure Project.
The ECC exempted the minimum 1.25% income tax on the income of public sector universities. It also abolished 10% tax on undistributed reserves of the companies that operate under their own laws.
The ECC also permitted the Water and Power Development Authority (Wapda) to raise Rs57 billion from banks against the sovereign guarantee of the government for clearing arrears of net hydel profit of the governments of Khyber-Pakhtunkhwa and Punjab.
Published in The Express Tribune, December 23rd, 2017.
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