Millers have threatened to increase sugar price by five rupees per kilogram following the decision of the Federal Board of Revenue (FBR) to revise the GST by Rs 3.84 per kg. FBR's decision not to charge GST at old ex-mill price of Rs 28 per kg of the commodity and collect the tax according to the existing ex-mill price of Rs 52 per kg, has created discontent amongst the millers.
"The millers have decided to increase ex-mill rate by Rs 5 per kg keeping in view the government's latest decision," Chairman of the Pakistan Sugar Mills Association (PSMA) Abdul Wajid told Business Recorder on Friday. He said the sugar mill owners were already paying Rs 4.91 sales tax to the government at old ex-mill rate of Rs 28/kg to lower the prices of the commodity in retail market.
"Now, the FBR has asked to pay Rs 8.32/kg of sugar on existing ex-mill rate of Rs 52 due to which the cost of production would be increased up to Rs 3.41/kg," he said. He said the cost of sugar production would be increased to Rs 3.41/kg if the FBR charged sales tax on ex-mill rate of white refined sugar. The prices of sugar in the retail market would jump from Rs 54 to Rs 60/kg ahead of the holy month of Ramazan, he added.
He alleged that the government was trying to harass the sugar mill owners by issuing statements of crackdown against sugar mills and announcing the collection of sales tax on ex-mill rate. "It is said the sugar mill owners had stored refined sugar and blocked supply to the wholesale market for creating shortage of the commodity but in reality the millers already offered the government to buy 200,000 tones of locally manufactured sugar from them at cheaper rates," he said.
He said the Sindh government had decided an increase of 25 percent in the minimum support price per 40 kilogram of sugarcane due to which the support price would increase to Rs 101 from Rs 81 for crushing season 2009-10, which would further increase sugar prices in the retail prices.
The government was randomly increasing sugar prices, but forcing the sugar mill owners to reduce ex-mill rate, he said. He demanded of the government to force the FBR to withdraw its decision to fix the sale tax with ex-mill price. "If the government refuses to withdraw its decision, the mill owners would increase the ex-mill price of sugar by Rs 5/kg for minimising losses," he added.