The government is considering reversing its earlier decision of exempting the sugar industry from the condition of selling the commodity to only those dealers who will declare their particulars, as the preferential treatment extended to the influential sugar barons has encouraged other lobbies to demand a similar treatment.
The Federal Board of Revenue (FBR) was forced to review the concession after Pakistan Vanaspati Manufacturers Association and All Pakistan Textile Mills Association started pressurising the government for getting a similar facility, FBR sources said.
They said the favour to the sugar industry due allegedly to political pressure had created distortion in the market, which also dented FBR’s drive to register undocumented sectors of economy.
The withdrawal of the concession is expected before October 15, but it is yet to be seen how the FBR copes with the situation this time around as sugar millers have a significant presence in parliament on both treasury and opposition benches.
On September 6, through a statutory regulatory order, the FBR made it mandatory for registered manufacturers, importers and exporters who supply taxable goods to unregistered persons to provide the latter’s computerised national identity card or national tax number.
Later, through a letter to Pakistan Sugar Mills Association, the FBR exempted the sugar industry from this condition and allowed it to sell the commodity without getting the particulars. This special treatment is likely to not only discourage documentation, but may also cause losses of billions of rupees to the kitty at a time when the FBR is already struggling to achieve a highly ambitious tax collection target of Rs1,952 billion in the current fiscal year.
The FBR had announced that it would not release duty and tax refund to those manufacturers who would not provide the unregistered dealers’ particulars and they will have to pay sales tax on supplies made without getting particulars.
Former chairman of the Pakistan Sugar Mills Association Iskandar Khan opposed the NTN and CNIC condition, saying it would be impractical to implement and lead to submission of fake particulars, creating problems for the industry.
On Tuesday, the Punjab government also ordered the sugar millers to provide complete particulars of dealers to discourage hoarding. However, industry representatives have opposed the directive, challenging the provincial government’s jurisdiction.
This is not for the first time that the government has succumbed to the pressure exerted by politically well-connected lobbies. In the recent past, it distorted the sales tax regime by creating lower tax brackets for the textile sector which unlike common man is liable to pay only five per cent sales tax.
Published in The Express Tribune, September 29th, 2011.
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