The Pakistan Vanaspati Manufacturers Association (PVMA) has asked the Central Board of Revenue (CBR) to streamline the sales tax and withholding tax on imported edible oils to save the vegetable ghee industry as well as the general public from disaster.
The PVMA, in its budget proposals for fiscal 2007-08, proposed that the government should levy fixed FED/sales tax at Rs 5,100 per ton and withholding tax ranging from Rs 1,000 to 1,200 per ton on the pattern of already levied fixed customs duty of Rs 9,100 per ton and FED Rs 1,000 per ton on imported edible oils.
On this basis, the government would be able to generate a total revenue of over Rs 27 billion annually under the headings of customs duty, FED/sales tax and withholding tax on imported edible oils in addition to the taxes received from packing material ie tinplate and plastic pouches, chemicals, utilities, etc used by the vegetable ghee industry.
The revenue of Rs 27 billion would still be higher than the projected/expected revenue from the vegetable ghee industry. The PVMA executive committee in its meeting, however, unanimously opposed the proposal for levy of ad valorem duty on imported edible oils as it will unnecessarily raise the uncalled issue of under-invoicing of imported edible oils by the importers to save the customs duty.
The Association hopes that the proposals will help stabilise the prices of vegetable ghee/cooking oil in the country and also save vegetable ghee industry and the masses from further disaster.
The proposals were discussed by the PVMA executive committee, in its meeting held at Lahore recently, in the context of the discussion held by a PVMA delegation with PM's Advisor on finance Dr Salman Shah, the commerce secretary, and Secretary, the Industries, Production & Special Initiatives Ministry on May 8, 2007 in this regard.
The meeting focused on recent extra-ordinary increase in the prices of imported edible oils in the international market from $462 in July 2006 to $805 per ton in May 2007 and their impact in the increase of sales tax and withholding tax on imported edible oils and resultant increase in the prices of vegetable ghee and cooking oil in the local market.
PVMA Chairman Sh Amjad Rashid opined that due to the heavy increase in the prices of imported edible oils in the international market, the FED/sales tax on it has increased to over Rs 8,500 per ton in May 2007 vis-à-vis FED/sales tax of Rs 5,100 per ton in July 2006 and withholding tax increased to over Rs 2,000 in the current month vis-à-vis around Rs 1,250 per ton in July 2006.
He said the government is, at person, charging heavy amount of sales tax/withholding tax in excess in view of the price-hike of the edible oil in the international market at the cost of vegetable ghee industry as well as the general public.