The poultry industry believes, given that its size is much smaller compared to the processed milk industry, it should have received the zero-rating facility. PHOTO: FILE
KARACHI: The Pakistan Poultry Association (PPA), which is asking the government to review its decision of taking back the zero-rating tax facility from the poultry processing industry, has earned some support from economists.
The association has appealed to the government through advertisements in leading newspapers and built its case over the argument that the government should treat both poultry and milk processing industries at parity.
“I think the government should not give zero-rating facility to any industry as it causes distortion in the tax system. When you give such facilities to one industry, other also demands the same,” Kaiser Bengali, a renowned left-leaning economist, said.
“The government should bring down the sales tax rate to single digit, ideally to 5% from the current 17%, which is exorbitantly high and then levy it uniformly on all sectors,”
PPA, in its advertisements, argue that the government withdrew zero-rating facility for both poultry and dairy sectors in budget 2014, but then restored the facility for dairy sector within 15 days. Therefore, the government should also restore the same facility for the poultry sector.
According to officials in the processed dairy industry, the fear was that the government might withdraw the zero-rating for the upcoming fiscal year. But this did not happen as the government continued the facility for the dairy sector in the recently announced budget. This may have irked the poultry industry, which believes, given that its size is much smaller compared to the processed milk industry, it should have received the zero-rating facility.
According to officials in the poultry processing industry, the withdrawal of zero-rating facility in budget 2014 has caused an increase of Rs10-40 per kg on different finished products. The rise in prices is discouraging sales and, subsequently, the government will collect low taxes from this industry.
Former Institute of Chartered Accountants of Pakistan (ICAP) president Shabbar Zaidi commented that, the position of PPA is correct and it should get the zero-rated facility.
Published in The Express Tribune, June 13th, 2014.
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The WTO regime allows right of international trade, for market access and favourable prices. Why shouldn't PPA look to packing instead of producing as the dairy sector for processor did, and they won the previlege. Issues of non standardisation of feed, rating of feed is a major issue. In poultry production in Pakistan, which is causing several issues of health. The simple thing is to open import of quality/standardised poultry in Pakistan which should be fed on standardised feed.