Life without Coke
Pakistan’s Beverage Manufacturers have got a stay order from the Court preventing CBR from implementing the GoP decision to replace capacity tax imposed on 01 July 1990 and revert to the levy of central excise duty at the factory gate on actual manufacture as was once the practice. It may be remembered that it was during the first Ms Benazir Regime that the Beverage Manufacturers lobby had capacity tax implemented. To quote Seth Mohammad Aslam, then Member Provincial Assembly as well as owner of Leghari Beverages (Pvt) Ltd and Multan Beverages (Pvt) Ltd, from his letter of May 11, 1990 to the then Finance Minister, “Simple taxation system will ensure government revenues and will facilitate the tax payer also. It is requested that summer season is on, kindly survey the present installed capacity in the Industry and levy tax per operating valve. By adaptation of this simple system of taxation, the Government revenues should increase between 25 — 30% in the first year. This simple taxation system will not only enable the government to increase the revenue but will also relieve a large number of staff members from all the beverage factories and vigilance and intelligence agencies. I hope all these relieved staff members will be utilized on creative jobs i.e. finding new assessees for the government or assisting people to understand new forthcoming general sales tax”, unquote. In short, the Pakistan Beverage Manufacturers’ Association lobby maintained that they would be liable to pay Rs.1291.60 million, an addition of Rs.200 million which they were paying as “bribes”. Besides the fact that it is amazing for Pakistan entities of US companies to accept that they were in violation of the US “Foreign Corrupt Practices Act” or had knowledge thereof making them accessories, the fact that anyone would openly confirm the corruption within the system seems to have gone unnoticed in the laissez-faire attitude of GoP toward accountability.
Javed Talat, Chairman CBR, is an activist bureaucrat, not content to simply warm his office seat as the corrupt in Balochistan found out to their detriment when he was Chief Secretary. Having ascertained that the claims of the manufacturers that there would be an estimated growth of 25-30% annually in GoP’s revenues could not be relied upon, he recommended abolishment of capacity tax, to which the GoP accorded permission on April 22, 1994. According to the statistics compiled by CBR, even the original figure set by the Association for revenue collection on capacity tax basis could not be reached after expiry of three years. On the contrary the Association’s own members questioned in court the “Capping” formula agreed to by them and thus may get a refund of Rs.245 million i.e. GoP will end up with Rs.45 million less than it originally had, bribes and all. There is no doubt that the soft drinks lobby is a very strong one, their “war-chest” for lobbying purposes is a deep one capable of lining many pockets. By the Association’s own perception of growth the revenues should have been Rs.2523 million in 1993-1994. Furthermore, the payment of bribes never stopped, instead of paying at the gate to the excise staff (blue-collar one), it went into white-collar pockets for these who would UNDER-estimate relevant capacities.
MNCs like Coca-Cola and Pepsi have a field day in Third World countries, India got them into line by acting tough and doing without either for a number of years. No doubt Coca-Cola and Pepsi do not have a direct input as regards payment of but they do have an indirect responsibility and a moral commitment to pay GoP’s dues. Furthermore the US Government should be very interested in the double standards, seeing “ethics” being violated here as respects the payment of bribes. The Chairman CBR must be encouraged in his crusade to recover government dues, one believes that his greatest ally in this would be the MNCs themselves who have a vested interest in ensuring that they do not become accessories to malfeasance and corruption. Given that a court stay order allows capacity tax to remain in place presently, one feels that GoP must tackle this problem on a higher plane as it is unimaginable that either Coca-Cola or Pepsi worldwide would condone tax evasion.
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