Sales Tax collection on sugar falls 5.3pc

ISLAMABAD: Tax authorities have found that sales tax collection on sugar has declined by 5.3 per cent in the first eight months (July-Feb period) of the 2009-10 fiscal as it stood at Rs6.956 billion compared with Rs7.346 billion in the same period of the previous fiscal, it is learnt.

The declining trend has raised many eyebrows in the tax-collecting agency as every one knew the fact that the FBR has given extraordinary relaxations to sugar tycoons by reducing the rate to 8 per cent and fixed the price of sugar at Rs28 a kg for the purpose of deducting sales tax.

Sugar tycoons belong to both treasury as well as opposition benches. The sugar industry is basically politician dominated industry. Mill owners are political heavyweights of PML (Q), PPP and PML (N).

However, now the price of sugar in the domestic market stands around Rs70 a kg. Keeping in view this trend, FBR has moved a summary to the Economic Coordination Committee (ECC) of the Federal Cabinet for jacking up the price of sugar up to Rs60 a kg for the purpose of deducting sales tax.

“The Large Taxpayers Unit (LTU) Lahore has written to FBR to seek permission to hold audit of sugar mills to ascertain reasons for reduced tax collection,” said official sources while quoting a letter written by LTU Lahore high-ups.

The official data prepared by FBR, a copy of which is available with The News, shows that sales tax collection from sugar stands at Rs6956.06 million in the first eight months which is 3.7 percentage share in grand total of tax collection during 2009-10 while its collection was Rs7346.549 million in the same period of the previous fiscal year, showing 4.4 percentage share in the grand total collection of 2008-09.

Prices of the sweetener are declining in the international market. It went up to $850 a ton which has now scaled down to $585 to $649 a ton. This also showed up in the prices offered in the recent tenders floated by the Trading Corporation of Pakistan.

Talking to this reporter on Tuesday, one of the top FBR official said there was a need to initiate parameters-based audit of certain industries and the sugar industry was one of them. He said there was no need to proceed with balloting of audit as it would not serve the main purpose to detect the tax evaders. He said there were many mill owners who showed loss in their returns and there was a need to launch detailed audit against them.

When contacted to seek his views, the Chairman of the Pakistan Sugar Mills Association, Iskandar Khan, said the production of sugar declined from 3.2 million tons from last year to 2.9 million tons in the current year and that could be the reason behind the declining trend in sales tax collection.

source: thenews