Nationwide flour mills strike against withholding tax sparks concerns over shortage

Pakistan Flour Mills Association (PFMA) kicked-start the shutter-down strike Thursday morning till the government withdraws newly imposed taxes, cutting the supply of the staple food across the country.

The strike is feared to create a food crisis over the next couple of days, as the majority of wholesalers and retailers stock it for a shorter period of time, it was learned.

While talking to The Express Tribune, Chaudhary Amir Abdullah, Senior Vice Chairman Central, PFMA, said all the 1,600 flour mills nationwide have stopped grinding wheat from Thursday morning. They had already suspended washing of the grain and other preparations for the grinding operations from Wednesday morning.

The association had given the strike call on July 6 for Thursday for an indefinite period after their talks failed with the government. They had given five days to the government to withdraw the taxes and reverse its decision making flour mills the tax collection agents of FBR.

"No government officials have contacted any office-bearers since the collapse of the talks held before July 6," Abdullah said, adding the government's rigid behavior led flour millers to go on strike from the pre-defined schedule.

Earlier, the association office-bearers and members met Finance Minister Muhammad Aurangzeb and other high officials, but the meeting ended inconclusive.

Abdullah elaborated the government has imposed a 5.5% withholding tax (WHT) on flour mills with effect from July 1, 2024. In addition to this, it has imposed up to 2.5% taxes on the sale of flour to wholesalers and retailers, making the flour expensive by Rs8-10/kg.

Besides, the strike is also against the government agenda of making flour mills the tax collection agents. The government has asked millers to collect tax from flour wholesalers and retailers, while the rate of the taxes is exorbitant for non-filers.

He said that the Ministry of Finance has imposed 5.5% WHT on flour mill on the sales. In addition to this, the flour mills are asked to collect another 2.5% WHT on the sale of the essential commodity to retailers (non-filers) and 2% from wholesalers (non-filers).

On behalf of the Federal Board of Revenue (FBR), the flour mills are assigned to collect 0.5% WHT on the sale of flour to retailers (tax filers) and 0.10% from wholesalers (filers).

The decision to go on the shutter strike was taken at a meeting of the association members from across Pakistan. A majority of the 915 members of the association attended the meeting held in Lahore on July 6.

The strike call is not giving only against the imposition of the tax, but also against the government decision-making flour mills agents of FBR to collect the tax from their buyers. "Why is the creating hassle for flour millers? If FBR wants to collect the tax it should do it itself."

He said the shutter strike will continue nationwide till the day both demands are accepted by the government.

The becoming of the tax agent may bring serious consequences for the flour mills. Even it may create a serious law and order situation for them as many millers directly sell the staple food to individual retail buyers."

According to the Pakistan Bureau of Statistics (PBS), wheat flour (2.5-number) surged on average by 10.57% nationwide in the week ended July 4, becoming expensive to Rs1,970.40/20 KG bag. This translates into Rs98.52/KG.