Pak mills cut off flour supply in protest against tax hikes, move likely to worsen crisis

June 24, 2021 5:46 AM STI

Karachi [Pakistan], June 24 (ANI): The Pakistan Flour Mills Association (PFMA) announced that all flour mills in the country have stopped supplying the commodity from Wednesday and will close their operations from June 30 to protest against the increase proposed three taxes related to the flour milling industry. This move is likely to exacerbate a flour crisis in the country.
“We will stop supplying flour from tomorrow and cease our activities from June 30. We have to resort to this protest due to the indifferent attitude of the government,” PFMA President Sindh Zone said on Tuesday, Chaudhry Muhammad Yousuf, the Express Tribune reported.
This comes after the federal government, in the recently passed 2020-2021 federal budget, proposed to abolish the 1% rebate on annual flour mill sales; increase the sales tax on bran by 10 percent and the sales tax on the importation of machinery used to make flour by 7 percent.
The increase in sales tax is expected to increase the price of a 20 kg bag by Rs 30 while the increase in sales tax on bran is expected to increase the price of each 20 kg bag by flour to Rs 67. The implementation of taxes is likely to increase the price of a 20 kg bag of flour by Rs 97.
In a letter to Finance Minister Shaukat Tarin, PFMA chairman Asim Raza last week described the tax hike as a mistake by the Federal Bureau of Revenue and asked it to maintain the current tax rate.

Raza told the Express Tribune that the current rate of sales tax relief on the importation of machinery used in the manufacture of flour is 10 percent, which will increase to 17 percent in the next fiscal year. .
An increase in taxes will significantly increase the cost of imported machinery by several million rupees. At present, 65 percent of the total cost of setting up factories consists of the purchase and import of modern machinery.
Additionally, an increase in the sales tax on bran to 17 percent is expected to increase the price of a 20 kg bag of flour from Rs 60 to Rs 67.
PFMA President Sindh said it is necessary to import 3-4 million tons of flour in August in order to meet local needs. He said the country consumes 30 million tons of flour a year.
The federal budget passed by the government led by Imran Khan has been criticized by many in Pakistan, with some claiming that it brings no relief to the common man, that there is no incentive, no possibility of job creation and income generation.
Finance Minister Shaukat Tarin was greeted with taunts from the opposition benches, with members shouting slogans and taunting the finance minister laughing loudly as he praised Prime Minister Imran Khan’s economic initiatives when presenting the budget for the 2021-2022 fiscal year. (ANI)

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