ISLAMABAD: The government announced on Monday that it would launch a crackdown on the sugar millers involved in hoarding to jack up prices artificially in order to pocket billions of rupees from consumers.
The price hike came after the government increased general sales tax on sugar from 8% to 17% while announcing the federal budget for 2019-20. However, the sugar millers have already increased prices without waiting for approval of the budget by parliament, which is currently debating the budget.
Briefing a special committee of the National Assembly Committee on Agriculture Products, in a meeting chaired by National Assembly Speaker Asad Qaiser, Minister of State for Revenue Hammad Azhar said the government would conduct raids on sugar mills, which had hoarded the commodity and increased prices artificially.
“No new tax has been imposed on flour and ghee in the budget,” he emphasised while dismissing talk of influence of different lobbies on budget preparation.
Adviser to Prime Minister on Commerce Abdul Razak Dawood told the special committee that an artificial increase in sugar prices had been made, adding that cotton growers had switched to sugarcane crop for achieving better returns.
Hammad also talked about tax levy on the cigarette manufacturing industry, saying it would generate revenue of Rs140 billion in the upcoming fiscal year 2019-20. In the current year, he said, the government expected collection of Rs115 billion worth of revenue from the cigarette industry.
He pointed out that the increase in tax on tobacco crop had been withdrawn in a bid to provide relief to the growers. However, the tax rate had been increased on cigarette packs.
An increase of Rs14 has been made in the federal excise duty on a cigarette pack in category one and the duty has been raised by Rs8 in category two. The commerce adviser, while backing the textile barons, criticised the government for abolishing the zero-rated sales tax facility. He also opposed the re-imposition of duty on cotton import in order to provide relief to the textile millers.
Dawood was of the view that the textile sector should not be blamed and voiced concern over scrapping of the zero-rated facility for the five major export-oriented sectors in the budget.
He termed it a wrong decision and asked where the textile industry would go now. He called it a big thing that had happened to the sector. He suggested that cotton harvest should be given a price which was in line with the international market. The adviser pointed out that 1% duty had earlier been imposed on cotton, which was hiked to 10% now. The Ministry of Commerce has opposed the restoration of duty on cotton import, believing that it would impact the export of textile and jeopardise the textile industry. Dawood also opposed the fixing of support price for cotton.
Speaking on the occasion, the cotton commissioner argued that exports were not hurt by the restoration of duty on cotton import. However, he added that farmers suffered because of abolition of duty on imports. Textile millers imported 1.8 million bales of cotton between February and April 2019.
The national food security secretary pointed out that cotton prices had remained subdued for the past 10 years and farmers were denied due price for their produce.
“Duties on cotton import are removed when prices in the domestic market start rising. Farmers are discouraged by lower prices,” he said.
Committee member Riaz Fatiana protested the grant of incentives to the cartel of sugar producers, All Pakistan Textile Mills Association, car manufacturers and fertiliser producers. He revealed that 25 out of 27 recommendations made by the special agriculture committee had been rejected. “I walk out of the committee to register protest,” he said and demanded that the government dissolve the finance ministry and the Federal Board of Revenue.
Published in The Express Tribune, June 25th, 2019.