Monday March 27, 2023

Govt decides to reduce taxes on food items

By Mehtab Haider & News Desk
October 19, 2021
Govt decides to reduce taxes on food items

ISLAMABAD: The government has decided to reduce taxes on the prices of food items amid rising inflation, sources told Geo News on Monday.

According to the sources, a meeting to review the rising inflation and the overall economic situation in the country was held here under the chairmanship of Prime Minister Imran Khan. During the meeting, the Prime Minister was briefed on the prices of commodities in the country, sources said, adding that in order to give relief to the masses, the government has decided to reduce taxes on food items. Sources said that PM Imran Khan has also directed the authority concerned to take strict measures against hoarders and artificial inflation.

The Prime Minister issued orders to the federal ministers to take steps for the implementation of price control committees and also directed them to monitor the artificial inflation in their constituencies.

Sources added that the impact of rising prices of petroleum products was also discussed in the meeting. Earlier, while announcing launching a targeted subsidy programme for protecting the poorest segments within the next few days, Federal Minister for Planning Asad Umar said he did not change his stance over excessive taxation and levies on petroleum products while sitting in the government.

He reminded his speech delivered on the floor of the National Assembly when the PTI was sitting on opposition benches whereby he had opposed taxation and levies to the tune of 52 percent during the PMLN government while now all taxes and levies on POL products were less than 20 percent. It’s just peanuts now while comparing to the past, he said, and added that he always opposed higher taxation on POL products.

“The government has decided to bring down the GST rate from 17 percent to 8.5 percent, abolish additional customs duty of 2 percent and slash down customs duty from 10,000 per ton to Rs5,000 per ton on palm oil for reducing the price of cooking oil by Rs45 to Rs50 per litre in the domestic market,” Federal Minister for Planning Asad Umar said while addressing a news conference here at the Pak-China Friendship Centre on Monday.

The minister predicted by quoting experts that the prices in the international market might not come down till March-April of the current fiscal year 2021-22. Some experts even feared that it might not come down till June 2022, he added. However, the minister did not reply clearly when this scribe asked about the impact of the devaluation of the exchange rate for causing a price hike. “There is the devaluation of 3 to 3.5 percent in recent months,” he said and added in the same breath that the rupee got improved and stood at Rs152 against a dollar but then it nosedived to Rs172 against a dollar mainly because of a surge in imports on account of increased prices in the international market.

The minister argued that in the aftermath of the COVID-19 pandemic, the production and supply side of commodities and POL products got choked so the world witnessed the highest-ever surge in prices. By quoting the WB data, he said the price of Brent crude oil went up by 81.55 percent in the last year from September 2020 to September 2021 while in Pakistan, the POL prices increased by just 17.55 percent. There has been no increase in domestic gas prices in the last year while RLNG prices increased by 64 percent in the international market and on average, the gas prices went up by 16 percent while in Pakistan, the gas prices were increased by 8.5 percent.

The prices of cooking oil went up 48 percent in the international market while it increased by 38 percent in the domestic market. The price of sugar surged by 53 percent in the international market while it increased by 15 percent. The prices of urea fertilizer increased by 66 percent in the international market while they went up by 28 percent in Pakistan.

He said the rate of GST was slashed down from the standard rate of 17 percent to 6.8 percent while the petroleum levy was reduced from Rs30 per liter to Rs5.62 per liter. On diesel, the GST was reduced from 17 percent to 10.3 percent while petroleum was brought down from Rs30 to Rs5.14 per liter. The Customs Duty on POL products was also reduced by Rs3 as it stood at Rs7.50 per liter on petrol and Rs9.27 per liter on diesel.

He said the price of wheat flour increased mainly the support price of wheat. It was jacked up from Rs1,400 to Rs1,800 per 40 kg. This decision, he said, caused an additional income of Rs1,000 billion for farmers while for urban consumers, the price of wheat flour went up. He said there was a difference of Rs250 to Rs300 per 20kg bag of wheat flour in Punjab and Sindh mainly because the second largest wheat producer federating unit was not releasing wheat properly.

When asked about the IMF’s tough conditions, he said he was privy to these ongoing parleys. He hinted that the IMF had softened its conditions in April 2019 compared to its demands put forward in earlier October but did not share further details. It is relevant to mention here that then he was removed from the slot of minister for Finance and Dr Abdul Hafeez Shaikh was brought in as an economic wizard. When the IMF team was negotiating a deal in Islamabad just ahead of the budget at that time, the PTI government had removed then-secretary Finance Younas Dagha and former governor SBP Tariq Bajwa. This is still a mystery why Younas Dagha and Tariq Bajwa were removed at this crucial juncture. It was largely believed that both were not ready to accept the tough conditions of the IMF under the bailout package so they were shown the door.