ISLAMABAD: The government on Monday again decided to cut general sales tax and customs duty by half and abolish two per cent additional customs duty on edible oil to reduce its price by Rs45-50 per kg and introduce a major targeted subsidy programme in a couple of days.
“We have decided to reduce its [edible oil] price by Rs45-50 per kg by reducing GST from 17 to 8.5pc, customs duty from Rs10,000 per tonne to Rs5,000 and abolish 2pc additional customs duty to provide relief [to the people],” Planning and Development Minister Asad Umar said at a hurriedly called news conference.
He said the relief in overall inflationary trend was not imminent over the next three to four months, adding that there were different forecasts about a decline in prices, but “this may not be visible in one-two months”.
Minister sees no relief in overall inflationary trend over next three-four months; PM to announce major targeted subsidy programme in a couple of days
Prices would come down over the next few months, between April and June next year, he added.
Likewise, Mr Umar said, the prime minister would announce a major targeted subsidy scheme for the majority people in a couple of days. Asked about the timing of reduction in taxes and duties on edible oil, he said it would be notified soon after the return of Adviser to the Prime Minister on Finance and Revenue Shaukat Tarin from his visit abroad.
Mr Umar is the third cabinet member to have announced measures for reduction in edible oil price without actual relief. On Sept 21, Shaukat Tarin had also announced Rs45-50 per litre reduction in edible oil price through adjustments in tax rates. When asked when the prices would drop, PM’s special assistant Iqbal Cheema had said the same day that prices would immediately come down as orders had already been issued.
Responding to a question as to why wheat prices were not going down despite record production, Asad Umar said not only wheat output was the highest ever but maize also had a record production and rice production was the second highest ever, but it had to be kept in mind that the government decided to increase wheat price by Rs400 to Rs1,800 per 40kg to support farmers.
He said the prime minister had two choices — either to pay higher prices to farmers in Ukraine or any other country — and he decided to support the local farmers. This added about Rs1 trillion to the income of the farming community which also had positive spillover impact on other fast-moving capital goods.
Mr Umar said the prime minister would be announcing in a day or two a targeted subsidy scheme for the people whose household budgets had been impacted by the unprecedented global price hike. He said there was no doubt inflationary pressures were impacting people but the entire world was passing through an unprecedented and extraordinary period of extremely high commodity prices.
Similarly, the minister said cooking oil price rose by 48pc in the international market and 38pc in Pakistan, sugar price surged by 53pc internationally and 15pc in Pakistan, urea fertiliser price increased by 67pc in the international market and 28pc in Pakistan.
He conceded that the prices of essential commodities were comparatively low in Pakistan but still a significant hike had been witnessed that badly impacted the purchasing power of the common man.
Replying to a question, the minister said the government had taken action against various mafias and cartels, but since cases were pending in court, the government was helpless in punishing the culprits till the conclusion of cases.
He declined to comment on the government’s talks with the International Monetary Fund, saying he was not directly or indirectly involved in the process. He said he was not aware as to how much windfall would be earned by oil companies after the recent major increase in prices of petroleum products.
The minister claimed that the prices of petroleum products and other commodities were still low in Pakistan compared to other regional countries as the government kept on reducing taxes as the prices went up. Responding to a comment that petroleum price comparison with regional countries should be made on the basis of their higher per capita income, he said the poverty rate in India and Bangladesh was far higher than Pakistan and this meant purchasing power in Pakistan was better.
Mr Umar said that according to the World Bank, crude oil prices went up by 81pc in one year since September 2020, while petrol price in Pakistan increased by only 17pc. Similarly, the price of liquefied natural gas (LNG) increased by 135pc, while it increased by only 64pc in Pakistan during that period.
He said that since Pakistan’s gas mix comprised two-third domestic contribution, its prices remained unchanged, hence the average gas price increased by only 16pc.