Eight items add 29% to import taxes
Dollar climbed to three-week high on Friday making crude imports more expensive for countries. PHOTO: REUTERS
After increasing taxes in budget the government collected Rs62 billion at the import stage on just eight energy and cooking oil products - a 100% surge over the last year - and also largely a reason behind increase in their prices in the local market.
Prime Minister Imran Khan had twice approved to increase the petrol prices since July 15 and his cabinet members had claimed that he allowed the highest-ever, nearly Rs120 per litre price, due to upsurge in crude oil prices in the international market.
However, the data collected at the import stage tells a different story. The government’s decision to increase the customs duty rates on petroleum products have also significantly contributed in price determination.
The data compiled by the Federal Board of Revenue (FBR) relating to the duties and taxes collected at the import stage highlights heavy indirect taxation that has started hurting the consumers badly. The taxes that are paid on their domestic sales are over and above this collection.
In July, the FBR collected Rs62 billion in taxes at the import stage on petrol, natural gas, crude oil (a new tax), high speed diesel, bituminous coal, RBD palm oil, olein palm and furnace oil, according to FBR statistics.
Read Govt ups rates of food items
The Rs62-billion collection was higher by 100% over Rs31 billion generated on these products in July last year, showed the data. One of the major differences was imposition of 17% sales tax on crude oil and increase in customs duty on import of petrol from 5% to 10%.
The Rs62-billion collection was equal to 29% of the total taxes collected at the import stage and 15% of the total Rs413 billion taxes that the FBR generated in July alone.
Overall, Pakistan Customs had collected Rs213 billion at the import stage under the heads of customs duty, sales tax, withholding tax and federal excise duty as compared to Rs143 billion collected during the first month of previous financial year, showing a growth of 47% as compared to previous financial year.
Pakistan’s imports are also poised to significantly increase due to various factors like expansion in economic activities and high food imports due to drop in their domestic production. The central bank projected $61 billion in imports in the current fiscal year, up by $7 billion or 13%, said the sources.
However, the commerce ministry is of the view that imports would surge to a record $70 billion in the current fiscal year, up by $16 billion or nearly 30%, said the sources.
In July, the FBR collected Rs12 billion taxes on petrol import - up by 50% or Rs4 billion - and despite a significant reduction in quantity of petrol imports, according to the FBR numbers. On average, the collection of taxes on imports of petrol was equal to 24% of the import value of July. There was massive surge in collection of customs duty on import of petrol, which increased from Rs670 million to Rs4.5 billion after the government doubled the customs duty rate to 10% in the budget.
The import of gas was the second biggest revenue spinner at the import stage. The FBR collected Rs10.2 billion taxes on gas import - higher by 168% or Rs6.4 billion over July last year. The quantity of gas import in July this year was far less than last year but value of import was more than double to Rs43 billion.
Read more Prices of basic food items witness sharp increase
The crude oil imports fetched Rs9.7 billion in taxes at the import stage alone up by 410% or nearly Rs8 billion after the government slapped 17% GST on its imports in the budget. The sales tax collection on crude oil was Rs8.1 billion as against nil collection in the same period of the last year.
The government says that the taxes paid at the import stage on crude oil will be refunded to the refineries that will have no impact on the petroleum products prices. However, 100% taxes are never refunded as there are also wastages during processing of these oils.
The Rs9.5 billion collection of taxes on import of high speed diesel was the fourth highest revenue spinner at the import stage - also higher by 143% or Rs5.6 billion. There was also significant increase in both the value and the volumes of high speed diesel that helped to increase the collection. The government collected Rs6.2 billion in sales tax alone at the import stage.
The bituminous coal import was the fifth highest revenue spinner - brining in Rs6.6 billion taxes that were higher by Rs3.7 billion or 127%.
The RBD palm oil import generated Rs5.1 billion taxes last month -up by 76%. Similarly, the palm olein imports fetched in another Rs5 billion but it was 17% less than the previous year.
Various cooking oil brands have increased their price to Rs330 per litre - an increase of at least Rs50 after the budget, which has affected every household.
The furnace oil import gave another Rs3.4 billion last month - higher by Rs2 billion or 126%. There was also an increase in import quantity of furnace oil. The country imported Rs13.6 billion worth furnace oil last month.
Published in The Express Tribune, August 8th, 2021.
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