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'Private sector should have been consulted before POL price raise'

RECORDER REPORT

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry has expressed serious concern over the latest increase in POL prices announced by the Ministry of Petroleum and Natural Resources and regretted that the measure has been taken without consulting the private sector.

In a statement issued in Karachi on Tuesday, acting President, FPCCI Sheikh Jamil Mehboob Magoon, said that the measure would have cost-push effect on the economy and a multiple inflationary effect on consumers. It would increase transportation costs and input costs for industry and thus make exports more uncompetitive in the international market.

He said that it was unfortunate that the government was using the lever of POL prices to raise revenue to meet its budget deficit and was oblivious of its adverse effect on the economy.

Magoon said that besides the levy of taxes on import of crude petroleum i.e. 10 percent custom duty, 15 percent sales tax and 5 percent income tax, the government was charging more taxes on retail sale of petroleum products in the name of development surcharges to the extent of 40 percent of the cost. This high incidence of taxes had not only crippled the national economy but also led to smuggling of the item. The menace of smuggling of POL products from Iran had become so rampant, he said that the item was freely available in Balochistan and was also marketed in Karachi.

He said that the government would be well advised to follow the example of our neighbour India which did not increase the POL prices but made downward adjustment in the taxes so that there was no effect on the retail prices.

Sardar Ashraf, a member of the managing committee of FPCCI, said that the increase in POL prices would encourage smuggling of petroleum products from Iran. Already, he said smuggled petroleum products from Iran were available at half the price in Balochistan and even in some areas in Karachi.