After budget gets implemented: Prices of powdered milk, LED lights, tea, poultry, other edbles to rise

ISLAMABAD: Different stakeholders on Friday warned the government during the Senate Standing Committee on Finance meeting that prices of powdered milk, LED lights, imported tea, poultry and many other edible items will go up once the budget 2021-22 gets implemented after approval of the parliament.

The Senate Standing Committee on Finance has rejected all types of increase in employees’ taxation through withdrawal of exemptions. The panel also rejected tax exemption for political parties. “Neither the political parties are filing any income tax returns nor the FBR ever asked for it and now the FBR provided legal cover to it. We have decided to review it,” the FBR’s Member Inland Revenue Muhammad Tariq told The News on Friday.

The FBR high-ups accomplished readings of the Finance Bill 2021-22 and explained each and every point before the members of the Senate Standing Committee on Finance, which met here at the Parliament House on Friday.

Senator Saleem Mandiwalla said that he was receiving calls that the political parties had obtained an exemption in the budget but they did not require any such favor. The FBR decided to review this exemption clause in finalisation of the budget process. The Senate panel rejected all proposals that proposed withdrawal of tax exemptions on allowances for employees in the budget.

The Senate panel was also informed that the pharmaceutical sector obtained over Rs2 billion incentives on duty/tariff reduction but the prices of medicines would not decrease in the market. The same is the case with the auto sector and now the government has decided getting undertaking from auto sector players those whatever incentives they would get in the budget, it would be passed on to customers by reducing prices of cars. The senators were very annoyed over the failure of the Engineering Development Board (EDB) to implement the deletion program. Senator Saleem Mandiwalla asked for closing down the EDB. The representative of the Ministry of Industries told the meeting that there were 65 percent deletion program for small cars and 55 percent in case of small cars up to 850cc. Adviser to PM on Commerce Abdul Razak Dawood informed the Senate panel that it was highly unfortunate that no progress was made on indigenization program into the auto sector since 2006 as during the Musharraf regime, a detailed plan was in place to implement the deletion program. He said that when he took over the charge, he was informed that the ongoing auto policy for 2016 to 2021 did not allow anyone to make changes. “Now a few days are left and the government made a new strategy to implement this deletion program," he added.

The representative of powdered milk, Ijaz Shah, informed the Senate panel that the Sales Tax of 17 percent was imposed at import stage. There are 95 percent taxes in our existing cos. He warned that if the taxes are not withdrawn, then the price of milk would go up by Rs200 to Rs250 per kg in the domestic market within three months period.

The powdered milk, he said, was not imported at retail packaging because it was imported in bulk quantity of 25 kg bags. There is 30 percent gap between domestic production and overall consumption requirement of milk in the country.

The committee rejected the Ministry of Petroleum's plea for abolishing deemed duty on refining of POL products. It is the proposal of Ministry of Petroleum that the collection of tax should be handed over to private sector to install new and modern refineries because the existing one could not meet the domestic requirements. The committee sought details because incentives were not fully utilized to build modern refineries in the country.

Adviser to PM on Commerce Abdul Razak Dawood on Friday conceded before the Senate panel that the FTAs balance was not in favor of Pakistan. He said that China had provided all kinds of incentives what Pakistan had demanded for on the pattern of ASEAN countries. China reciprocated and provided tariff concessions on around 313 items.

The revised FTA with China was expected to be operationalized on January 1, 2020 but the COVID-19 outbreak caused losses to respective ministries.