Apparently, the ginners’ demands do not sound unreasonable. They want the government to withdraw all refundable taxes as they waste time of official collectors – first on collection and then on refunding the taxes. Thus, it hardly makes sense to keep those taxes, which have to be refund later.
They also seek abolition of standardisation fee of Rs5 per cotton bale. The government collects a fee of Rs700 million to run the Pakistan Cotton Standardisation Institute, which the ginners say is a ‘useless institution’ and ask why should they foot the bill for an institution that does not serve them?
The ginners went on strike when the Punjab Agriculture Department refused to renew their working licences, which it does every year on June 30, without full recovery of a fee of Rs5 per bale. The fee has been levied for the last three years and few dozen out of 1,200 factories also pay it. Most ginners do not pay this fee. This time ginners collectively refused to pay. Currently the ginners do not have licences to run their factories. If they do run their factories, it would be an illegal act.
In spite of the strike being a week-old (at the time of writing of this piece), the ginners have not been able to meet the federal minister concerned. Since, the minister is looking after six ministries, he has not been able to spare time. The task thus has been relegated to the Federal Cotton Commissioner and provincial secretaries, who are not decision makers.
All demands of ginners pertain to the federal government, but the Punjab government, which neither has stakes in tax collection nor can take any decision in this regard, is negotiating with ginners. This has led to allegations that the government was not serious in resolving the crisis and all its efforts were aimed at prolonging the process with the hope that the strike would fizzle out.
The commerce minister has not been able to find time in spite of media report of seed cotton price crashing by almost 33 per cent – down to Rs1,400 per maund from Rs2,100 in pre-strike price. The farmers reportedly have stopped picking of cotton because of price crash and the rest of cotton has been left in the field in spite of rainy weather. In Rajanpur district, floods have ravaged around 70,000 to 80,000 acres of standing crop because the farmers had not harvested their crop because of price factor.
The wholesale reshuffling of bureaucrats has its own cost. Most of the bureaucrats have still not settled in their offices. They also miss ministerial and policy guidelines to handle such issues.
The Punjab Agriculture Department, which is being used as tax collection agency by the federal government, extended the ginners working licenses for a month up to July 31 so that the dispute could be resolved without strike. But the federal set-up did not move to resolve the crisis.
The federal preference to maximise its cash returns without much effort has created crisis in most of the sectors, especially agriculture where all its sub-sectors have come under pressure. It has also made the tax collection machinery even lethargic. Much of the tax is collected by banks, utility agencies and at source deductions. In the same streak, it now wants the ginners to collect 10 per cent tax from all its lint and oil brokers.
The ginners maintain that most of the brokers are illiterate, do not pay taxes and do not have national tax numbers. It would be virtually impossible for the ginners to make these brokers pay taxes to them.
The CBR should bring them in the tax net, issue them NTN and then ask the ginners to make deductions. It is unfair for the CBR to ask the ginners to do the work for which the government has created the CBR machinery.
The ginners strike could have easily been avoided had the government acted on time and with due diligence.
—Ahmad Fraz Khan