'Tax on black tea should be rationalised'

The continuous decline in import of black tea through legal channels by over 10 percent annually and rapid increase in import of this commodity under Afghan Transit Trade Agreement (ATTA) has become a serious issue and could destroy the local trade, importers said.
Pakistan imported over 100 million-kg of black tea in the year 2006 and the leading importers foresee the import of this commodity will decline to 85 million to 90 million-kg during the current year 2007. On the other hand, the import of black tea under ATTA will expectedly reach to 80 million-kg during the current year.
The record shows that Pakistan imported over 114.082 million-kg black tea in the fiscal year 2005-06 while the import of this commodity was 130.071 million-kg in the fiscal year 2004-05 through legal channels.
On the other hand tea import under ATTA had increased by 10 million kgs only in the first nine months of the fiscal year 2005-06 as 27.66 million kgs black tea was imported under ATTA during the said period against 17.64 million kgs black tea imported in the year 2004-05 only from Kenya.
The recent data shows that 14.2 million-kg black tea was imported under ATTA from April 09, 2007 to date only from Kenya as 6.5 million-kg black tea was imported under ATTA from April 09, 2007 to May 05, 2007 while 3.0 million kg tea was imported on May 26 and 4.7 million kg of this commodity was imported on June 07, 2007.
According to Pakistan Tea Association (PTA) figures, legal import of black tea into Pakistan in the month of May 2007 stood at 6.89 million-kg, which included import of blenders ie Unilever and Tapal, whereas imports through ATTA are averaging 7.1 million-kg from Kenya only.
The leading local tea importers while expressing their concerns over the issue say that the total cost for importing tea under ATTA is only 10 percent while the legal importers have to bear around 33 percent cost in account of duties and taxes.
In spite of giving relief to save the local tea trade, 1 percent import surcharge is slapped on all imports in the recent federal budget, Hamid Saeed Khawaja, Chairman Pakistan Tea Association (PTA) said here on Friday.
He said that PTA has given presentation to the Chairman Central Board of Revenue (CBR) at Karachi Chamber of Commerce and Industry (KCCI) on March 28, 2007 and again gave presentation on May 19, 2007 at CBR Headquarter in Islamabad to brief him about the seriousness of the issue.
He said the legal trade of this commodity could destroy by encouraging the tea import under ATTA. "The legal importers could adopt illegal means to save their businesses", he added.
"The government should consider our proposals to save the legal business of black tea in the country", he said and proposed that the government should rationalise tax rates on imports of black tea through ATTA and the legal channel.
"Interestingly the government declares the import of black tea as 'luxurious item' instead of listing it in ordinary food items", he said. He requested the commerce ministry, CBR and other concerned authority to look in the matter and resolve it on priority basis to save the legal trade.