KARACHI: The one per cent hike in general sales tax from 16pc to 17pc coupled with increase in taxes on edible oil imports will push up the prices of many items.

Wholesalers and retailers term this move as a bad omen for consumers who have already paid high prices during the PPP-led coalition government.

“I do not see any relief from the government as a 1pc hike in GST is bound to enhance the price of many products especially packed items,” general secretary Karachi Retail Grocers Group (KRGG), Farid Qureishi said.

While hailing the government’s move to encourage documentation and bringing more traders in the tax net, he said: “I cannot term the overall budgetary measures as anti-consumers but the government is looking forward for some sacrifice from the end users which would come in shape of price hike in various items.”

“People will have to swallow a bitter pill of paying high price before Ramazan starting from second of next month,” he added.

Chairman Karachi Wholesalers Grocers Association (KWGA), Anis Majeed said that all packed items will become costlier by at least 1pc while no GST exists on loose wheat, flour, rice, pulses etc.

“It is not an overall consumer friendly budget but rather it can be called situation friendly as the budget lacks any steps that can bring down food inflation,” he said.

He urged the government to take back the decision of GST hike by 1pc immediately as it will trigger food inflation in many items. He recalled that the PML-N had promised it would not take any steps which would raise prices.

A ghee and cooking oil producer feared jump of at least Rs1.50 to Rs2 per kg in ghee in view of one per cent jump in GST.

However, in cooking oil, the price hike may be more than Rs2 per kg due to imposition of Rs 400 per tonne duty on canola seed import and Rs 1,000 per tonne duty on locally produced oil like canola, rape seed, mustard, etc.

As Ramazan starts from second week of next month, consumers will bear the burden of paying high prices in ghee and cooking as these items’ consumption rises sharply in the holy month.

The government has decided to give subsidy of Rs2 billion on hot selling items during Ramazan but retailers said that only 20-30pc people purchase items from utility stores owing to low quality goods.

However, the association leaders agreed that some ‘steps of the government are good through which traders and shopkeepers will come into the tax net’.

In his budget speech, Finance Minister Ishaq Dar said that traders were not contributing to the tax revenue in keeping with their share in GDP. Adjustable withholding tax is accordingly proposed to be collected from wholesalers and retailers in specified sectors at the rate of 0.1pc and 0.5pc.

The rate of tax to be collected from wholesalers and dealers is being reduced to 0.1pc from 0.5pc. The manufacturers, distributors and commercial importers shall collect this tax.

All taxable supplies made to unregistered persons will include 2pc further tax for encouraging registration. Again, once they get registered, they will no longer have to bear this charge.