Afghan assembly wants tax lifted on food imports
Friday, 25 April 2008

REUTERS, KABUL - Faced with rising food prices that have seen protesters take to the streets, Afghanistan's lower house of parliament on Thursday demanded the removal of all taxes on food imports.

In an special session, parliament said the government had not done enough to curb soaring prices or act against hoarding by some traders, the house said.

Landlocked Afghanistan is one of the world's poorest countries with half its 25 million people living below the poverty line. The government taxes virtually all food imports to some degree.

"In the session, it was decided that the government should exempt food commodities from taxes," parliament said in a statement.

The decision needs to be approved by the upper house of parliament and the president for it to come into force. Wheat prices in Afghanistan have risen by an average of 60 percent over the last year with certain areas seeing a rise of up to 80 percent, the U.N.

World Food Programme (WFP) said. The U.N.'s Food and Agriculture Organisation (FAO) estimates Afghanistan's total wheat import needs in 2007/08 at 550,000 tonnes, including 100,000 tonnes of food aid. The FAO said it has tentatively estimated Afghanistan's total output of cereals in 2007 at more than 4.6 million tonnes -- above average and well above the relatively poor harvest of 2006 when it came in at 3.9 million tonnes.

But despite the high price of wheat, profits from planting opium poppies are still much higher so there is little immediate incentive for farmers to switch crops. Afghanistan produces 93 percent of the world's opium which is processed to make heroin and exported across the world.

President Hamid Karzai's government has allocated $50 million to buy food from neighbouring countries, an official said, blaming the rise in world food prices for the accompanying increases in Afghanistan.

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