Importers have urged the government to fix sales tax rate on sugar and issue fresh directive to Trading Corporation of Pakistan to float another tender of 50,000 tons of the sweetener to offset the sudden likely rise in demand with the advent of Ramazan.
Raees Ashraf Tar Mohammad, Chairman, Pakistan Commodity Traders and Importers Association (PCTIA), told Business Recorder that the government should adopt a policy of sales tax fixation on one-time basis to offset the sudden demand of the commodity during the holy month of Ramazan. He said that just as the government supports the farmers, fixes sales tax on supply of urea it should fix the rate of sales tax on sugar.
Explaining further he said that if the selling price of fertiliser touched 500 rupees per bag from 200 rupees per bag, the government fixed 30 rupees per bag sales tax. "The government, to further cut sugar prices, fixed sales tax of Rs 2 per kg in order to offset the demand which may creep upward after 15th of Shahban where we would see brisk buying from retailers and wholesalers," Ashraf said.
Another option tabled by him was that recently the Trading Corporation of Pakistan, to improve supply of sugar and curb price hike, floated a tender to sell 50,000 tons sugar.
The corporation received bids for 40,000 tons and the price ranged from Rs 23.50 to Rs 24 per kg. This indicated that the prices were on downward trend and might further reduce the price of the commodity.
The PCTIA chairman said that after a fortnight, the government should ask TCP to float another tender of 50,000 tons sugar for domestic consumption, which would ease pressure from the commodity market and the government's task to benefit the common man in Ramazan would be fulfilled. Moreover, it would also check inflation numbers.
A leading importer said that the government through well-engineered measures had controlled the prices and liberalised its import policy but because of ample import of sugar since June to August period, the importers have started incurring losses.
Several importers have cancelled sugar consignments worth 100,000 tons and halted the shipments from their origins after paying penalties to exporting companies. They have paid nearly $10 to $17 per ton to the exporting companies and as much as $5 per ton to indentors. Some of the importers, to avoid losses, have re-exported the consignments but the importers are facing colossal losses following arrival of the commodity at Karachi port.
The prices at the wholesale market for various varieties of sugar were quoted at 23.25 rupees to Rs 24.25 per kg while the cost incurred by the importer is around Rs 26 to 26.50 rupees per kg, thus facing a deficit of Rs 2 to Rs 2.25 per kg.
Another importer said that during the recent tender floated by TCP to import sugar received bids of $355 and $362 per ton for cargoes of 25,000 tons each. If it calls another tender, the prices at the international markets have softened and might get a price of $345 per ton, he added.