PTI govt to levy sales tax on actual sugar import price

Industries ministry withdraws summary for import of 300,000 tons of sweetener


Shahbaz Rana March 19, 2020
Reuters file photo of sugar

ISLAMABAD: The federal government on Wednesday decided to charge sales tax on imported sugar at its actual price and withdrew a summary for the import of 300,000 tons of the commodity - the two decisions that may further strengthen monopoly of sugar barons.

The Federal Board of Revenue (FBR) also issued a notification aimed at bringing changes in the sales tax regime for the imported sugar. Through a Statutory Regulatory Order, the FBR abolished the minimum import price of $725 per ton of sugar for the purpose of calculating 17% sales tax.

Now, the 17% sales tax will be worked out on the basis of cost, insurance & freight (CIF) value of imported sugar plus the applicable customs duty. This will increase the sales tax on every kg of sugar as compared to the old fixed $725 per ton.

Although international sugar prices have started falling due to the overall crash in markets caused by COVID-19, the imported sugar will become expensive once the prices return to normal levels.

Sugar trading has become a sensitive topic after about a 35% increase in its prices. The federal cabinet on Tuesday approved the inclusion of a representative of a prime intelligence agency in a joint investigation team probing the hike in prices.

The federal government has so far remained unable to break the nexus between hoarders and millers and its inaction has instead strengthened their hands.

The Economic Coordination Committee (ECC) of the cabinet on Wednesday was set to take up a summary for the import of 300,000 tons of sugar. But as the meeting began, the cabinet secretary informed the ECC that the summary had been withdrawn by the Ministry of Industries and Production.

The Ministry of Industries had recommended the ECC to allow import of 300,000 tons of white sugar through the private sector without taxes and duties subject to the condition that no financial support would be provided to importers by the federal and provincial governments and the import quota would be implemented and monitored by the State Bank of Pakistan (SBP) on a first come, first served basis.

A day before the ECC meeting, Pakistan Sugar Mills Association met with Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh. It was the second time in as many months that the ECC either opposed the import of sugar or did not take up the summary.

Last month, the ECC banned the export of sugar but turned down a proposal for the import of commodity that Prime Minister Imran Khan had approved in January as a measure to arrest the skyrocketing prices of the sweetener.

Sugar prices increased by 32% to Rs80 per kg last week over the same period of last year, according to the Pakistan Bureau of Statistics (PBS).

Other matters

The Ministry of Overseas Pakistanis and Human Resource Development presented a report of the task force on overseas employment and welfare of overseas Pakistanis.

The ECC had constituted the inter-ministerial task force in February last year to look into the issues of overseas employment for Pakistani manpower and make recommendations in consultation with relevant stakeholders.

The task force has identified the trades and skill-sets in demand in order to meet requirements of the international job market, develop a centralised technical and vocational education and training (TVET) certification and verification system, and improve the regulatory mechanism for curbing substandard certifications and helping provincial TEVTAs in developing their skill development capacities.

Its recommendations include developing a mechanism for sharing data among NAVTTC, employment bureaus and promoters of employment opportunities and available skills, efficient provision of e-passport, NICOP, POC to overseas Pakistanis and addressing issues of overseas Pakistani schools.

The ECC directed the task force to come to the ECC a month after the budget and brief it on the overall progress on the measures taken by the committee for the welfare of overseas Pakistanis.

The ECC also approved a technical supplementary grant of Rs4.2 billion for the FBR from the Pakistan Raises Revenue Programme to meet the mandatory and inevitable expenditures for fulfilling the project conditions.

The ECC, on the issue of recovery of outstanding wharfage charges of Rs1.7 billion on the import of liquefied natural gas (LNG) by PSO, directed that the outstanding amount would be paid in 10 equal instalments without interest over a period of next 10 years. However, in January 2023, a committee will review the circumstances and suggest any possibility for early repayment of the remaining sum.

Published in The Express Tribune, March 19th, 2020.

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