‘Will have to pass on cost to consumers’

Dairy sector says withdrawal of zero-rated tax regime would be disastrous

LAHORE: With the budget coming up, Pakistan Dairy Association (PDA) has registered its apprehension regarding new taxation measures.

The dairy industry has predicted that they will have no choice but to pass on the price increase to consumers, said PDA Chairman Babur Sultan, after an emergency meeting convened by PDA on Thursday.

The session had been called to discuss the impact of the proposal under consideration by the government that zero-rating be withdrawn on non-dairy products in the 2016-2017 budget.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 is more than wheat (12%).

“We fear that if the zero-rating regime is withdrawn, it will result in a decline of over 20% in the sale of packaged milk.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 consuming unhygienic and unprocessed loose milk.”

PDA Vice Chairman Ikramul Haq added government revenues will fall substantially, while adversely affecting the  livelihood of 600,000 farmers associated with the sector.

Published in The Express Tribune, May 27^th, 2016.

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