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LCCI assures support to Beverage industry against capacity tax

LCCI assures support to Beverage industry against capacity tax

Staff Reporter

LAHORE: The Lahore Chamber of Commerce & Industry (LCCI) has assured its full support to Pakistan Beverage Manufacturers Association to put the industry’s concerns before Federal Finance Minister Ishaq Dar to help resolve the issue of imposition of capacity tax.

The assurance was given by the LCCI President Farooq Iftikhar while talking to a delegation of Pakistan Beverage Manufacturers Association led by its Ex-Chairman Ikram Elahi. The LCCI President said the Lahore Chamber of Commerce & Industry understands that the government should provide an opportunity to small and medium players in the beverage industry to explain their point of view before the imposition of capacity tax.

The Ex-Chairman of Pakistan Beverage Manufacturers Association Ikram Elahi informed the LCCI President that capacity tax would hit hard the low-profile international brands and local brands which created a strong competition and enabled the consumers to get beverages at a competitive price.

He said, “One fails to understand why it wants to repeat the same mistake of 1991, which had resulted in the closure of dozens of beverage and juice units.”

In the current scenario where there is severe shortage of gas and electricity, there is a disparity in distribution of energy among provinces, cities and districts. How such a system could work, he said.

“It is our request to the government that this is not the time to conduct experiments, the FBR should learn from its previous mistakes,” he said.

In this modern age, taking the advantage of technology, cameras could be installed to monitor the production and clearance of the beverage units along with reintroduction of supervised clearance for at least a period of three years. That would enable the government to practically evaluate and determine the actual sales and clearances of the beverage industry of Pakistan, he said.

Ikram Elahi, who is the Chief Executive of Pakistan Fruit Juice Co (Pvt) Limited – one of the oldest plants in existence since 1956 – regretted that the government has not taken the view or given any opportunity to small and medium manufacturers to listen to their side of the story on this tax. His two plants at Multan and Islamabad have already closed down as a result of 1991-94 capacity tax and he has now given notice to the Federal Board of Revenue (FBR) for the closure of his Lahore plant which would send a depressing signal to the prospective investors.

He said that after 1991 capacity tax, the two multinational beverage companies had a total of 55 percent market share whereas remaining 45 percent was with the low-profile international brands and local brands which created a strong competition enabling consumers to get beverages at a competitive price and barred these multinational giants to create a monopoly.

To eliminate this competition which is a hurdle in profiteering, these multinationals approached the government to introduce the scheme and succeeded. Now, the market share of these two multinational beverage companies is above 90 percent and remaining 10 percent is with the low-profile brands. To eliminate the remaining competition from this 10 percent segment, these multinational companies have again lobbied the government to reintroduce same system.