A general increase in prices is attributed to two factors: in anticipation of the approval of Sales Tax and Finance Bill 2010 by parliament with an additional 700 items under the sales tax regimen, and the poor business environment due to continuing energy shortage that has led to a decline in productivity.
Traders have raised the price of several food (on which there will be no RGST) and non-food items (on which RGST would be levied) including those sold in retail packing eg rice, pulses, unstitched cloth, shoes, cooking oil, vegetables and sugar on the plea that the government is going to impose Reformed General Sales Tax (RGST), revealed a survey carried out by Business Recorder here on Monday.
The increase in prices of many commodities consumed by general public in the twin cities of Rawalpindi and Islamabad clearly reflects that the traders have already started passing on the RGST that is yet to be levied on the consumers in anticipation that the RGST would be approved by parliament. Ironically most of such traders are not registered with the sales tax department as they claim they have an annual turnover below registration threshold of Rs 5 million.
Traders at Gunj Mandi Rawalpindi ie main wholesale and retail market catering to the twin cities of Rawalpindi/Islamabad and also for Khyber Pakhtunkhwa, Gilgit-Baltistan, and Azad Jammu and Kashmir (AJ&K), while talking to Business Recorder said that they had only one option: to increase prices given that the manufacturers increased prices of these items due to energy shortage, higher oil prices leading to increased costs of production.
Taj Ali, President Karyana Merchants Association Rawalpindi and Waseem Ahmed, a vegetable trader both argued that the fault for rising prices lay with the government's continued inability to provide basic inputs to the manufacturers at competitive prices.
Waseem Ahmed said that prices of essential kitchen items have seen a phenomenal increase from the last one year: 1/4 kg packed milk was being sold at Rs 14 during the same period of last year which now is being sold at Rs 20, good quality cooking oil was being sold at Rs 130 and now it is available at Rs 167 per kg.
Waleed a shoe store owner said that Service Shoe Company has recently increased per shoe pair price by Rs 100 and all other shoe producing companies have also jacked the prices of their products by Rs 50 to Rs 150. Anyat-ul-Rehman, a crockery trader at Abbpara Market Islamabad said that prices of an entire range of locally manufactured crockery has recently increased by 20 to 25 percent due to multiple reasons and imposition of RGST would further increase price of crockery by 15 percent.
Presently, a number of items are being taxed at the retail stage. These items include fruit juices/vegetable juices, ice cream, aerated waters or beverages, syrups and squashes, cigarettes, toilet soap, detergent, shampoo, toothpaste, shaving cream, perfumery and cosmetics, tea, powder drink, milky drink, toilet paper and tissue paper, spices sold in retail packing bearing brand names and trade marks and shoe polish and shoe cream.
Manufacturers are paying sales tax on all the stages of value addition of these consumer items which are then included in the printed retail price. Once the RGST is levied then the prices of items in retail packing would increase by the amount of the tax levied.
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