ISLAMABAD (August 30 2003) : The Economic Co-ordination Committee of the Cabinet (ECC) on Friday approved reduction in withholding tax, customs duty and sales tax on 13 various items.
The ECC, which met here with Finance Minister Shaukat Aziz in the chair, approved reduction in withholding tax (income tax) from 6 percent to 3 percent minimum on analogy of import of edible oil.
It also approved recommendation of the Anomaly Committee to reduce the rate of custom duty on sodium dichromate, stearic acid, non-CFC gases and bronze powder. It also approved the scope of clause (b) of SRO 507 (1)/2003 of June 7, 2003 to be limited to only three items ie air-conditioning/chilling plants and humidification plants, cranes and propane storage tank/heat exchanger and gas separator.
The meeting discussed the issue of reducing prices of steel and cement. Shaukat decided to hold meeting with cement industry to reduce prices.
The govt has also asked the Steel Mill not to sell its products to traders and only to sell to manufacturers, which will reduce manipulation of prices.
To promote import of ship scrap, it also reduced the value-addition from 21 percent to 14 percent on the ship scrap for the purposes of imposition of sales tax.
This decision has been taken to promote construction industry and housing which, in turn, would generate economic activity and increase employment.
The Minister for Industries informed ECC that his Ministry has issued directives to Steel Mill to sell steel to industrial users only. As a result of this decision, the wholesale cost has come down which in turn would trigger accelerated activity in the construction and housing sector.
Similarly, sales tax has been waived on local supply of fresh, liquid and dried milk with or without addition of sugar or any other sweetening matter.
Sales tax on livestock/poultry, including plant/machinery meant for processing, packaging and preservation, has also been waived in order to boost export of these items.
To encourage rice production, the ECC approved indicative price of basmati, Irri-6 and other varieties of rice and noted that the indicative price approved includes: super basmati and basmati 2000 Rs 485; basmati 385 Rs 400; Irri-6 Rs 215 and KS-282, DR 82, DR 83, DR 92 and Niab irri-9 (FAQ) Rs 230.
The ECC also recommended measures like improving productivity of rice with regard to use of improved seeds, soil management, use of gypsum, weed control, integrated management, harvesting and threshing of rice, improving quality and effective marketing.
To mitigate effects of drought, on recommendation of the Planning Commission, the ECC meeting approved conversion of drought emergency relief assistance amounting to $ 160 million from loans into grants for the provinces.
This would provide relief to provinces and reduce their debt burden.
It also noted with concern that in spite of reduction in excise duty in cement, the benefit has not been passed on to the consumers.
The Ministry of Industries in a detailed briefing informed the ECC that consumption of grey cement in 2003 increased by 11.55 percent.
Around 43000 tons cement was exported registering an increase of over 303.97 percent.
The current capacity utilisation of 68 percent of cement industry was expected to increase to 75 percent by the end of the current financial year.
The ECC recommended to the Cabinet the establishment of dry port at Sukkur.
The establishment of dry port would provide doorstep facilities to the businessmen of Upper Sindh to expand their businesses and increase their exports.
It would also create attractive investment climate and entice investors to set up their business ventures in Pakistan.
The Monopoly Control Authority made a comprehensive presentation to ECC on its performance since its establishment in 1971.
It noted with satisfaction that MCA has successfully decided cases of private limited companies for conversion into public limited companies; case of excessive share holding; 23 cases of incorporate financing; eight cases of monopoly power and case of cement cartel and registration of restrictive agreements.
The ECC encouraged the Authority to promote measures to fight cartels and promote free competition.
The ECC directed CBR to make a presentation in the next meeting on custom reforms and functioning of dry ports.
The ECC expressed satisfaction over sufficient stocks of wheat, edible oil, oil, fertiliser and sugar.
It noted that prices of essential items remained stable and inflation level was under control.
Ministers for Communications, Agriculture, Industries and Privatisation, Chairman BOI, Federal Secretaries and senior officials attended the meeting.