Flour Mills Threaten Strike Over New Withholding Tax

Flour mills across Pakistan are on the brink of an indefinite shutdown in protest against a new withholding tax included in the 2024-25 budget. The Pakistan Flour Mills Association (PFMA) announced the strike after a unanimous decision by its members during a general body meeting on Saturday, July 6th.

Millers Object to Tax Collection Duties

The core of the dispute centers around the government’s decision to impose a withholding tax on flour sales. The PFMA vehemently opposes this move, arguing that tax collection is the sole responsibility of the government and not the flour milling industry. They believe this new measure is impractical and places an undue burden on their operations.

Concerns Over Rising Food Prices

The PFMA has appealed to the Prime Minister to reconsider this tax policy. They warn that the implementation of withholding tax could lead to a significant increase in flour prices, a staple food for millions of Pakistanis. A prolonged shutdown of the flour milling industry could further exacerbate this situation.

History of Tax Collection Challenges

The PFMA highlights past government practices of relying on utilities like electricity and commodities like petroleum to collect taxes. They argue that these indirect methods have proven ineffective in enforcing direct tax collection. They believe the new withholding tax on flour sales would create another layer of inefficiency, ultimately leading to higher food prices for the public.

Flour Mills Emphasize Tax Compliance

The association emphasizes that the flour milling industry has a history of complying with existing tax obligations. They view the new withholding tax as an unjust burden and impractical to implement.

Potential Impact on Consumers

The threatened strike by the PFMA raises concerns about the potential disruption to the flour supply chain and a subsequent rise in food prices. Affordable access to flour is crucial for Pakistani households, and a prolonged shutdown could have significant consequences.

Negotiations and Next Steps

The PFMA is urging the government to reconsider the withholding tax policy on flour sales. If their demands are not met, they are prepared to continue their strike indefinitely. This situation creates uncertainty for consumers and highlights the challenges Pakistan faces in reforming its tax collection system.