Govt generates Rs31.72 bn general sales tax on sugar

LAHORE: The government generated Rs31.72 billion under the head of general sales tax on sugar while the Punjab government failed to implement the price of Rs85 per kg fixed by it.

According to the official data available with The News, sugar millers sold 2.474 million metric tons sugar during December 2020 to May 2021. According to the sales tax returns filed by the sugar millers to the Federal Board of Revenue (FBR), the sugar millers declared that they sold Rs 174.285 billion worth of sugar during this time while average ex-mill rate was declared at Rs70.42 per kg without adding sales tax. After adding wholesale margin and distribution cost of Re one per kilogramme, transport, packaging and retailers margin of Rs4 per kilogramme and 17 percent sales tax which is calculated at Rs12.82 per kg brings the average sales price of sugar at Rs88.24 per kg.

This is negating the claims of the government ‘efforts’ of providing relief to the public on sugar prices. Rather than relief, the government has managed to get huge amount of money from the public pockets on account of sales tax while the sugar millers always pointed out that sugar prices could be reduced if government withdraws sales tax on it.

The data obtained by the Controller General of Prices of the Federal Ministry of Industries and Production from FBR and the Pakistan Bureau of Statistics shows that the price of sugar is on the rise after the month of January 2021, when the average retail price was Rs90.06 per kg, as on 7.1.21, increasing to an average retail price of Rs100.70 per kg, as on 8.7.21, and is still showing an upward trend. This also shows the working and governance of the Punjab government which lately fixed the sugar retail price of Rs85 per kg while it was not available at this price anywhere in the market in the province. Presently, sugar is being sold at Rs110 per kg in Punjab.

Furthermore, according to the order issued by the Controller General of Prices of the Federal Ministry of Industries and Production on July 16, 2021 stated that ‘a meeting of the FBR, Ministry of Industries and Production (MOIP) and Pakistan Sugar Mills Association (PSMA) was held on 14.7.21, and a meeting of the Sugar Advisory Board (SAB) was also held on 15.7.21, and in both the meetings it was observed that sugar mill owners are not willing to lower sugar prices to fair levels voluntarily.

According to the order, the controller general of prices fixed the retail price of locally produced sugar at Rs88.24 per kg (inclusive of tax), at which it shall be made available to the general public. The order further said “the provincial authorities and ICT are directed to implement this order and to take action against the mills, dealers, distributors and retailers who do not comply with this order, as provided under the Price Control and Prevention of Profiteering and Hoarding Act, 1977. Further, a weekly compliance report shall be filed by authorities exercising the delegated powers of Controller General of Prices in the provincial and federal jurisdictions”.

The new consumer price of Rs88.24 per kg is fixed till November 15, 2021. The order said, “this order shall come into force immediately and will remain in force till 15.11.21 unless rescinded or modified earlier”.

However, despite the clear order of the Controller General Price of MOIP, sugar is still being sold at Rs110 per kg and above across the country. This is making the mockery of the government orders and also raising questions on governance; knowingly sugar is being sold at Rs110 per kg and above per kg while lower price is fixed which was never implemented in the past.

When contacted, Punjab Industry Secretary Wasif Khurshid said the new price of sugar was fixed just days ago while instructions were issued to the deputy commissioners to implement the official rates. “They are asked to take action against those who violate the official price likewise in the past,” he said, adding that in the recent past actions were taken against the profiteers and violators by imposing fines and registering FIRs. Last time, almost Rs180 million fines wers imposed against the profiteers and price violators, he added. However, he said since the new price was issued a day before while Eidul Azha holidays were also going to begin so the impact of the government actions would be seen after Eidul Azha.