Wheat tax threatens to spike flour prices in Pakistan

Pakistani consumers face yet another potential economic setback as the government considers imposing new taxes on wheat products, which could lead to a notable increase in the price of flour.

The Pakistan Flour Mills Association has urgently convened in Lahore this week to address the looming crisis. Flour mill owners are urging the government to reconsider its decision to levy withholding taxes on wheat products, warning of imminent disruptions and industrial strikes if their plea is ignored.

Chaudhry Amir Abdullah, Chairman of the Pakistan Flour Mills Association, expressed grave concerns in an interview with Express, stating that the proposed withholding tax could inflate the prices of wheat, flour, and fine flour by up to Rs 7 per kilogram. He emphasized that if implemented, this tax adjustment would translate into a Rs 106 hike for a 10 kg bag of flour, and a staggering Rs 460 increase for sacks of fine flour.

Highlighting a stark disparity in tax compliance, Abdullah pointed out that a mere 2% of Pakistan's population pays direct taxes, while the remaining 98% bear the burden of indirect taxes, including sales tax. He underscored that the imposition of withholding tax on wheat products would inevitably escalate the cost of essential commodities, adversely affecting ordinary households across the country.

Asserting the limitations of the Flour Mills Association, Abdullah clarified that neither they nor the flour mills fall under the purview of the government or its revenue collection agencies, such as the Federal Board of Revenue.