Juice Industry in Pakistan Seeks Relief from High Taxes, Citing Negative Impact

Pakistan’s formal packaged juice industry is urging the government to reconsider recent tax hikes, arguing they’ve hurt sales, revenue collection, and farmers.

The Problem:

  • A 20% federal excise duty (FED) and 18% sales tax were imposed on the industry in the 2023-24 budget.
  • Juice manufacturers claim this led to a 41% decline in sales, impacting their ability to utilize production capacity and invest in growth.

Impact on Farmers and Related Industries:

  • Reduced fruit juice production means lower demand for surplus produce and export leftovers, affecting farmers’ income.
  • The industry estimates fruit pulp purchases have dropped by nearly 50%, impacting pulp manufacturers dependent on them.

Concerns Regarding Tax Revenue:

  • The industry argues that the initial surge in tax revenue due to higher taxes might not be sustainable.
  • They believe a shrinking industry will lead to declining tax revenue in the long run.

Alternative Solutions Proposed:

  • The juice industry proposes removing the 20% FED to enable growth and potentially generate more tax revenue over time.
  • They suggest focusing on bringing the undocumented juice sector, estimated at 20% of the industry, into the tax net for increased revenue.

Export Potential:

  • A healthy domestic juice industry is seen as crucial for developing the value chain and boosting exports.
  • The industry forecasts potential exports of US$100 million within five years with a tax-friendly environment.

Looking Ahead:

  • The FBR has assured the industry of efforts to avoid additional taxation burdens in the upcoming budget.
  • Whether the government heeds the industry’s call for tax relief or seeks alternative solutions remains to be seen.

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