Tax­ing dairy in­dus­try to be an­other blow to con­sumers, farm­ers

Pakistan Observer - - ECONOMY WATCH - STAFF REPORTER

LA­HORE—The dairy in­dus­try will have no choice but to pass on the price in­crease to con­sumers if new tax­a­tion mea­sures are im­posed as var­i­ous news re­ports sug­gest, said Babur Sul­tan, Pak­istan Dairy As­so­ci­a­tion (PDA) Chair­man af­ter an emer­gency meet­ing con­vened by PDA on Thurs­day. The meet­ing had been called to dis­cuss the im­pact of the pro­posal un­der con­sid­er­a­tion by the gov­ern­ment that zero-rat­ing be with­draw non-dairy prod­ucts in the 2016-2017 bud­get.

The mem­bers con­cluded that there will be wide rang­ing, neg­a­tive im­pacts on the dairy sec­tor as well as the lives and health of mil­lions of Pakistanis. The mem­bers said that they could not af­ford to ab­sorb the in­crease in costs, and would have to in­crease the price of milk by Rs7 to Rs8 per litre. Pack­aged milk is only 6% of the to­tal milk con­sumed in Pak­istan while milk and dairy prod­ucts ac­count for 22% of kitchen ex­pen­di­ture, which wheat (12%).

Babur Sul­tan, PDA Chair­man, said, “We fear that if the zero-rat­ing regime is with­drawn, it will re­sult in a de­cline of over 20% in the sale of pack­aged milk. Con­sumers will, there­fore, be pushed to con­sume un­hy­gienic and un­pro­cessed loose milk.” He said that the gov­ern­ment needed to con­tinue the zero-rat­ing tax­a­tion regime, re-trans­pose dairy prod­ucts from 8th to 5th sched­ule of the Sales Tax Act 1990 and re­fund the full amount of out­stand­ing sales tax re­funds pend­ing for the last many years in or­der to boost in­vestor con­fi­dence.

Ikram ul Haq, Vice Chair­man of the PDA, added that it would be a lose-lose sit­u­a­tion for the gov­ern­ment, the rev­enues that the gov­ern­ment gets from the pro­cessed dairy in­dus­try will fall sub­stan­tially. But that’s noth­ing com­pared to the ad­verse im­pact on the liveli­hoods of 600,000 farm­ers as­so­ci­ated with dairy. is more than

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