Smuggling to thrive as pulses,porridge get levied as luxury items

KARACHI: An increase of five to ten percent regulatory duty on import of consumer items would increase impact on the pockets of the poor and result in more smuggling of these items, businessmen and retailers told The News on Thursday.
An increase in the regulatory duty of imported so-called ‘luxurious items’ by 5 to 10 percent, and up to 10 to 15 percent on around 400 other items was announced on Monday. The federal government increased regulatory tax on imports of 337 items, while bringing 61 new items under the regulatory duty which would generate Rs40 billion in revenues for the government.
However, businessmen and retailers reacted that the increase in regulatory duty would not have impact over the pockets of the rich. They said that the regulatory duty was not imposed to protect the local industry; its motive was to fill up the gap of the revenue shortfall only.
Rashid Siddiqui, former president Korangi Association of Trade and Industry (KATI), said some luxurious items consumed by one to two percent rich people would not have much impact over their pockets, as their pockets were too big. However, impact would be higher on the pockets of the poor, who were also consumers of some items that were brought under the increased regulatory duty. Local industry might be protected with that regulatory duty but “actually it will increase the smuggling”, he said.
Farid Qureshi, secretary general All Karachi Retail Grocers Association, said that local manufacturers were also increasing rates of tea and other consumer items, whose raw material was being imported. A packet of 950 grams tea was being sold at Rs570 in January 2014 and Rs825 now. It will further increase after the regulatory duty, he said.
He said that regulatory duty was mostly imposed on items, including tea, yogurt, shampoo, jams, tooth paste, and soap that were equally consumed by the rich and the poor. So, an increase of Rs5 or more on any item would impact the poor segments of the society a lot more compared to the rich.
Porridge was also consumed by everyone, regardless of their economic stature, as many doctors were prescribing their patients to use the imported porridge, he said. “All type of pulses were also consumed by both the rich and the poor.”
Tax experts are of the view that the tax net should have been widened instead of bringing the already taxed society under the burden of more levies. Since, Pakistan was not a manufacturer of all items it had imposed regulatory duty on that would have impact the poor. Asim Jaffry, Islamabad based tax expert, said that instead of increasing burden on the shoulders of the consumers, tax rate should have been broadened and trade been brought under taxation. “Increase in this levy is injustice with the consumers,” he said.
Civil society also opposes the increase on the import of consumer items that are equally consumed by all segments of the society including the rich, middleclass, and the poor masses. Hussain Jarwar of Indus Consortium said that the levy was imposed and increased in order to meet the government revenue collection target, but unfortunately no way was identified to improve the health, education and other necessities for the masses, who were already burdened with extra levies.