ISLAMABAD    -   Federal Board of Revenue (FBR) chairman Shabbar Zaidi on Tuesday said that there should be only 12.5 percent general sales tax (GST) on basic food commodities instead of standard 17 percent.

He said that former finance minister Ishaq Dar had increased the GST to 17 percent on food commodities as it was 12.5 percent before the PML-N government. He was of the view that GST should be only 12.5 percent on food commodities. He made these remarks in a meeting of sub-committee of the National Assembly standing committee on finance and revenue. The Committee meeting was held under the convenership of MNA Dr Aisha Ghous Pasha. MNA Ms Hina Rabbani Khar and MNA Dr Ramesh Kumar Vankwani also attended the meeting as committee members. The Standing Committee on Finance, Revenue and Economic Affairs of the National Assembly had constituted a sub-committee to recommend the measures for controlling soaring inflation in the country.

Committee chairperson said that cost of production is increasing in the country, which is one of the factors behind the soaring inflation. The manufacturers are passing on the impact of increasing cost of production to the end consumers. Similarly, the industrial sector is also showing negative growth. Nine out of 15 major industries had recorded negative growth in the month of July 2019. She further said that other reasons behind increasing inflation rate are currency depreciation and hike in power tariff. She also asked the impact of increasing interest rate on controlling inflation. She was of the view that interest rate should be reduced.

Senior officials of the FBR briefed the committee on the inflation. They informed the committee that there was no justification for increasing sugar prices from Rs50 per kg to Rs72 per kg in the country. They informed that FBR would monitor the production and sales of sugar in the country. The government is holding negotiations with the Sugar Mills Association on increasing commodity price. The government is working to eliminate the role of middlemen in fixing the commodity prices. The officials said that FBR had not increased that many taxes on food commodities. Sugar price should have increased by only Rs3.62 per kg and ghee price of Rs0.5 per kg due to the taxes increased by FBR. The FBR had enhanced taxes on sugar, ghee, petrol, tea and cigarettes.

Deputy Governor State Bank of Pakistan (SBP) Jameel Ahmed informed a parliamentary committee that inflationary pressure would start easing from the second half (January 2020) of the ongoing fiscal year. He said that SBP had projected inflation rate at around 11-12 percent for the current financial year. However, the International Monetary Fund (IMF) had estimated that inflation would remain at around 13 percent. He said that Monetary Policy Committee could give recommendations for controlling inflation rate. He was of the view that it is appropriate that he would give suggestions in this regard.