KARACHI: The price of commodity items like pulses, rice, wheat, wheat flour, sugar etc may remain unchanged as the government has not announced any budgetary measures that could drive the prices of these items down.

“The budget speech of Finance Minister Ishaq Dar lacks any incentives that can provide any price relief to common man,” Karachi Wholesalers Grocers Association (KWGA) Chairman Anis Majeed told Dawn on Friday.

“The government has not changed any duties and taxes on the import of various commodities which means there will be no price relief for the people during Ramazan,” he remarked.Finance Minister Ishaq Dar in his budget speech observed that milk, fat-filled milk and preparations for infant use have been enjoying zero-rating facility on supplies since the last so many years. As a result, huge amounts of refunds are claimed by the dairy sector.

Despite this, the benefit of the facility is not passed on to the consumers. “The government has proposed that zero-rating on preparations for infant use may be retained, while the zero-rating on milk and fat-filled milk sold in retail packing is proposed to be withdrawn. The exemption on milk and fat-filled milk will remain intact,” Dar proposed.

Pakistan Dairy Association Chairman and CEO Engro Foods Babar Sultan anticipated Rs7 per litre rise in tetra milk price from the budgetary measures.

He said the government would generate at least Rs9 billion revenue but abolition of zero-rating status would discourage new investment in the dairy sector.

After increase in tetra milk price, the retailers of loose milk would follow suit and push up price by at least Rs4-5 per litre whose inflationary impact comes to Rs250bn keeping in view huge market share of loose milk stakeholders who are out of tax regime. The market share of processed milk is just 7pc.

CHEAPER USED CLOHTING

However, people using second-hand clothes may have at least some benefit. The sales tax on used and worn clothing has been proposed to reduce to 8 per cent from 10pc.

Muhammad Usman Farooqui, Hon General Secretary Pakistan Second-hand Clothing Merchants Association, appreciated the government for taking care of poor who could not afford costly branded clothings and woolies.

He said reduction of import duty to 3pc from 5pc coupled with sales tax cut would bring down per container (20,000 kgs) cost by at least Rs15,000 which would be passed on to the consumers.

He said it would have been of more helpful for the poor if the government would have reduced the withholding tax to 2pc from 6pc. Import of worn clothing in July-April 2015-16 went up to 379,982 tonnes ($130 million) as compared to 372,561 tonnes ($102m) in same period last fiscal year. “I think it is a bubble budget. It seems and feels good but does not contain substance,” former chairman Paapam Nabeel Hashmi, adding that the budgetary proposals would hardly create any new jobs.

In order to promote industrial growth and employment generation tax credit at 1pc of the tax payable for a period of 10 years that is allowed for every 50 employees in an industrial undertaking to be set up by June 2018, is proposed to be increased to 2pc. This concession will be made available for 10 years to the industrial undertakings set up by June 2019. “Just giving tax credit for 50 persons employed is not enough as Pakistan needs 2.4 million jobs annually,” Hashmi said.

He said on the one side the government gives an impression for creating more jobs but on the other hand it is opening up the country’s economy to imports. He said lower duties on raw materials and inputs are needed but duty free imports of machineries ensure huge foreign exchange usage and jobs creation abroad and no jobs for Pakistanis.

He was of the view that no corrective actions have been announced to increase direct taxation and more emphasis was made towards indirect taxes.

He said new auto policy had already been announced although the industry had demanded incorporation of current assemblers in the new entrant policy incentives.

Published in Dawn, June 4th, 2016

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