KARACHI, Oct 15: Ghee makers fear prices of a 16-kg tin may go up to Rs900-Rs1,000 in Ramazan if the government does not review the fixed rate duty on import of palm olien oil.

“This may be one of the ever highest prices in Pakistan and consumers will feel adverse effect of high prices during Ramazan,” wrote Sheikh Amjad Rashid, an international food dealer, in his letter to the finance minister while pleading for a reduction in fixed duty on edible oil import.

Market reports reveal that international prices of palm olien oil went up in the last two weeks from $460 a ton to $510. This rise in the international prices of edible oil coupled with an unbelievable burden of local taxes has pushed up prices of a 16-kg ghee tin by Rs60 in the last one week from Rs820 to Rs880. Prices of 16-kg cooking oil tin have escalated beyond Rs900, and oil traders are predicting that prices may touch unprecedented level of Rs1,000 in Ramazan.

The government charges Rs9,050 duty plus Rs7,816 income tax and other charges and Rs3,454 sales tax on import of one ton of edible oil. Total impact of duty and all taxes comes to Rs20,320, which is 65 per cent of the landed cost of one ton of imported oil.

Edible oil import is one of the most scandalous businesses in Pakistan in which tax men are in close nexus with the importers. During the last fiscal year total import bill of edible oil was $304 million, which was 26 per cent more than a year ago in 2001-02.

In the current budget, the government cut down fixed duty from Rs9,500 on a ton to Rs9,050. A leakage of this information some six weeks before the budget presentation led to opening of letters of credit for a huge quantity of oil.

Ghee makers went on strike against the government’s tax policy in July during which prices shoot up by Rs50 on 16-kg tin.

Edible oil import showed an unprecedented increase during the last fiscal year because of the involvement of informal traders who made quick and easy money because of taxation policy. The State Bank of Pakistan in one of its quarterly reports held the levy of non-adjustable sales tax on ghee industry as one of the factors that has led to proliferation of informal trade. Ghee production went down in 2002-03 but oil import increased.