PVMA gives undertaking to pass on tax reduction impact to consumer price

LAHORE: Vegetable ghee/cooking oil manufacturers have given assurance to the government that they will pass all impact of reduction in the proposed taxes on the sector to the consumers by reducing the consumer prices of their products.

Further, they will also keep checking on their members and markets and report to the government in case any of its members were violating it by not passing the impact of the reduction in taxes to the consumers.

According to a written undertaking, copy of which is available with The News given by the Pakistan Vanaspati Manufacturers Association (PVMA) Chairman Tariqullah Sufi to the secretary Ministry of Industry and Production (MOIP) Jawad Rafiq Malik, has given assurance to the government on three points.

“PVMA assures that edible oil/ghee import and processing will completely pass on the tax relief provided by the government in true spirit. The PVMA assures that it will keep a close watch on prices charged to the consumers and will report any non-compliance or malpractice by any member or other person to the government. The PVMA assures that they will support any action by the government against such violators.”

Earlier, Prime Minister Imran Khan in a recent meeting questioned that why the prices of the ghee/cooking oil were not brought down despite decision was made and announced by Federal Minister Asad Umar in a press conference. The prime minister was told that working was under way among the ministries concerned and Federal Board of Revenue (FBR) for reduction in the duties and taxes on imported edible oil. Alongside reduction in duties and taxes, the PVMA was also being taken on board and getting assurance that reduction in duties and taxes would be passed on otherwise it would not benefit the public. The official said the PM instructed that there should be no further delay on the issue and reduction in the prices should be made quickly. The government quarters doubted that the ghee manufacturers will not reduce the prices in accordance with the reduction in the duties and taxes which are calculated around Rs31 to 37 per kg. The reduction in duties will bring down the prices of ghee/cooking oil back to recent increase level as the top brand has made an increase of Rs40 per kg/litre and reached at Rs 399 per kg ghee and Rs409 per litre.

It is pertinent to mention that the government has already given 100 percent sales tax and income tax waiver on import of edible oil by units located in tax-exempted areas (Fata and PATA). This has already impacted revenue of national exchequer alongside disturbed the import pattern of units located in taxable areas. This also affected the market sentiments. The PVMA has already informed the government that the units located in tax-exempted areas have a cushion of Rs70-80 per kg in terms of relaxation in duty/taxes to trade-off their imported raw material and end products in settled areas, partially wiping out the units located in taxable areas from transparent and fair competition.