CFTC acts on cooking oil prices
The Competition and Fair Trading Commission (CFTC) has issued cease and desist orders to five shopping outlets over elevated cooking oil prices.
Cooking oil companies have been reluctant to slash prices of the commodity following the removal of the 16.5 percent Value Added Tax (VAT).
If they fail to adhere to order, the firms risk being fined, according to CFTC spokesperson Innocent Helema.
In an interview Monday, Helema said, between Thursday and Friday last week, the commission investigated some shops in Lilongwe and Blantyre.
“These prices were compared against March 2022 prices in the specific shops. The commission issued five cease and desist orders to traders. The commission will also launch investigations for unconscionable conduct, excessive pricing of goods, against them,” he said.
The order requires the businesses to effect the removal of Vat on cooking oil.
Snap checks in mega grocery shops Monday revealed that traders were still selling the commodity at old prices, almost a week after the government gazetted the changes made.
For instance, a 2 little bottle of cooking oil is selling at between K6,700 to K7,200 depending on the brand and shop.
Among the amendments, the new law pushes for the removal of 16.5 percent VAT on cooking oil, a thing that aroused consumers’ expectation for a possible slash in prices.
But cooking oil manufacturers claim figures in the gazette have been quoted wrongly and are impractical.
Cooking Oil Processors President Peter Ngoma said the anomaly is making it impossible for them to import necessary materials for production.
“We’re engaging Ministry of Finance to include the correct tariff codes for VAT exemption,” Ngoma said.
Ministry of Trade spokesperson Mayeso Msokera said the government was undertaking market surveillance exercises to ascertain any unjustified prices.
“Government will act on any acts of unfair trading that will be identified including those of unfair prices,” Msokera said.
Tax expert Emmanuel Kaluluma weighed in on the issue.
“Basically the word exemption means the manufacturer will not be allowed to claim input VAT. So this is dawning on the manufacturers but, looking at principles of law, the manufacturers are in a worse position than they were when cooking oil was VAT taxable.
“This could be a result of these companies employing people who are not fully qualified as accountants and they fall short on costing the products properly and, as a result, they just wrap 16.5 percent on top of the old price but if they did proper costing methods at the time the tax was re-introduced, prices of cooking oil were supposed to be reduced,” Kaluluma said.