Businessmen resent petroleum products price hike, demands cut in taxes

Web DeskWeb Editor

03rd Jul, 2021. 05:33 pm
Businessmen resent petroleum products price hike, demands cut in taxes

KARACHI: The businessmen have resented the recent price hike in the petroleum products and demanded the government to provide relief to the industry by reducing the tax ratio on oil products, a statement said on Saturday.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former president and Businessmen Panel Chairman Mian Anjum Nisar urged the government to reduce the tax ratio on oil products to support the trade and industry, as the government has been charging a very high petroleum levy and sales tax.

Calling for uninterrupted gas supply to the industrial sector, he urged the government to upgrade the gas distribution and supply system to avoid losses.

Nisar said that with a view to improve the cash flow of businesses at this crucial time, the government will have to facilitate the industry through reduction in the tax ratio on all items, including oil products, besides lowering the markup rate, as the country’s economy is going through a challenging phase of the post-Covid-19 pandemic.

At a time when the country’s GDP ratio was very nominal, amid high cost of doing business, the industry needs maximum support and relief, he said, adding that the economy of Pakistan had been severely affected by the coronavirus pandemic, as the industries, particularly the Small and Medium Enterprises (SMEs) are striving to deal with the post-coronavirus economic crunch and need to get support.
Instead of providing subsidies or waivers, it is unjust to overburden the industries’ with rise in the cost of production. An increase in the prices of the petroleum products will further weaken the economic environment, which was already under threat on various fronts, Nisar added.

The FPCCI former chief said the price of petrol was increased Rs2/litre and that of high-speed diesel Rs1.44/litre. The price of kerosene was raised Rs3.86/litre and that of light diesel oil (LDO) Rs3.72/litre.

The high-speed diesel is used mostly in the transport and agriculture sectors; therefore, any increase in its price will lead to inflationary impact.

Kerosene price has also gone up, which is used in the remote areas where liquefied petroleum gas is not available for cooking purposes. So, any increase in its price will have a direct impact on the life of the poor. The price of light diesel oil has also been hiked, which is used in industries.

Nisar said that oil prices and inflation are closely connected in a cause-and-effect relationship. As fuel rates move up, inflation, which is the measure of general price trends in the economy, follows in the same direction upward.

Inflation is on the higher side due to the impact of the government’s economic policies of soaring fuel rates, enhancing power and gas tariffs and depreciating the local currency, he said, adding that the business-friendly policies should be adopted just like other neighbouring countries of the region. The sizeable cut in oil prices would certainly bring down the cost of doing business and Pakistan’s products would get their due share in the global market.

Nisar called upon the government to address the key issues of trade and industry, facilitate economic growth, which would lead to improving the tax revenue. The impact of Covid-19 has badly affected the business and industrial sectors, he said, and stressed on the government to bring down the general sales tax (GST) to ease the difficulties of businesses.

The move would reduce the cost of doing business, attract new investment, promote industrialisation and create new jobs. The FPCCI leader said the government has made an unprecedented increase in the ratio of tax, duty and petroleum levy ostensibly to earn billions of rupees in revenue.

He also demanded uninterrupted and low-cost gas supply to the industrial sector, urging the government to upgrade the transmission and distribution system to ensure continuous and smooth supply of electricity and gas.

The unaccounted for gas (UFG) of the Sui Northern Gas Pipelines Limited (SNGPL) reached around 11.9 per cent and 16 per cent of the Sui Southern Gas Company (SSGC) in the financial year 2020/21 against the permissible limit of 7 per cent.
Gas and electricity are the basic ingredients for the industrial sector and are a must to keep the wheel of industry moving, he said, adding that the growth of the local industry is a barometer of the economy.

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