LAHORE, May 11: The sugar industry came under further pressure on Wednesday when the government stopped millers from selling the product to unregistered dealers or wholesalers. A decision, which had been held in abeyance for more than two months, has now been imposed on an industry facing intense official pressure after being accused by Prime Minister Shaukat Aziz of ‘cartelization.’
An official letter of the Sales Tax Collectorate asked millers to stop selling sugar to dealers, who are not registered under the Sales Tax Act of 1990 or risk losing claims on deduction of input tax on such supplies.
Reacting to the decision, the Pakistan Sugar Mills Association has called it a recipe for disaster. According to the millers, the fresh ban can drastically cut sugar supply to open market. They say around 90 per cent of small traders or shopkeepers, who sell the entire sugar production in the country, are not registered under the act.
“Instead of bringing all their business under official scrutiny for one item, they will stop selling sugar. It will be a disastrous situation and the government should better be warned of it, they say.
The millers fear that once the crisis hits the market, the government will easily blame the industry for the situation and take a few more steps to squeeze it.
Mr Zaka Ashraf of the PSMA said even the current price crisis was the government’s own making. The price of sugar was stable in December last year when the government decided to import 200,000 tons of sugar. The ‘import mafia’ knew that the international price was higher than Pakistan’s and imported sugar would inevitably be costlier. It not only imported sugar, but also purchased huge quantities from the domestic market.
Once it accumulated stocks, it just declared high prices and sold it in the market. The government neither listened to us (the industry) then nor is it ready to do so now, he lamented.
He also said the industry was facing an official inquiry for forming a cartel and raising sugar price. But he wondered who would the industry blame for cartelization when everybody in the country could import sugar, which was not only duty-free but also free from six per cent sales tax which the domestic industry was paying. He also denied that the industry resorted to a collective lie and kept on exaggerating production figures till sugar shortages hit the market and the price started spiralling. The industry, he said, had always been maintaining production figure of 3.1 million ton against the domestic consumption of 3.6 million ton.
It had clearly told the government on more than one occasion that the country was facing a shortfall of 500,000 tons of sugar.
A government official was, however, of the view that the industry was very much the part of the mafia that raised the price. Even if the industry’s argument was taken, the so-called import mafia after all purchased domestic production.