Another wheat flour shortage is feared in the country after mills stopped supply of the commodity from yesterday and millers have threatened to go on strike from coming Wednesday by ceasing to grind wheat. Flour millers have announced these steps to protest against proposed taxes on the industry in the new finance bills: the abolition of 1% rebate on annual sales of flour mills, and a hefty increase in the sales tax on bran and hike in the sales tax on import of machinery used by millers by 10%. They claim that with implementation of the new taxes the price of a 20kg bag of flour would soar by nearly Rs800. Considering that wheat flour is the staple in Pakistan, this quantum jump in its rate will likely shoot up the general price level to an unbearable high.
The annual consumption of flour in the country is around 30 million. Millers say they are importing the latest machinery because they work faster and save costs on water, power and time, besides improving the quality of flour. The proposed hike in taxes will increase the price of imported machinery by millions of rupees. At present, millers say, the purchase and import of machinery make up 65% of the total cost of setting up a modern flour mill. The government has proposed increase in the sales tax on bran from the existing 7% to 17%, and it too will jack up the price of flour. This is because the government takes into calculation, in consultation with millers, the price of bran while fixing the price of flour. This might result in a big leap in the price of the commodity.
The millers have drawn the attention of the finance minister towards the proposed taxes fearing that it might have grave consequences for the common people, and attributed the proposed taxes to an error by the FBR. Some sections of millers claim that the country needs to import 3-4 million tonnes of flour soon.
Published in The Express Tribune, June 24th, 2021.
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