Flour mills strike

The Pakistan Flour Mills Association’s (PFMA) shutter-down strike, which began on Thursday morning, highlights critical issues affecting both the industry and the general populace. The imposition of new taxes by the government has driven the association to halt the supply of flour across the country, sparking fears of an imminent food crisis. The strike, which involves 1,600 flour mills nationwide, underscores the pressing need for a balanced and fair tax policy.

The newly imposed 5.5% withholding tax on flour mills and the additional 2.5% taxes on flour sales to wholesalers and retailers have significantly increased the cost of flour by Rs8-10 per kilogram. This surge in prices disproportionately impacts the poorest segments of society, who rely on affordable flour as a staple food. Moreover, the government’s decision to make flour mills tax collection agents for the FBR has added an undue burden on the industry, complicating their operations and exposing them to potential legal and logistical challenges.

The PFMA’s demands are reasonable and deserve serious consideration. The government should engage in constructive dialogue with the association to address these concerns and prevent a full-blown food crisis. First and foremost, the government should reconsider the imposition of the 5.5% withholding tax and the additional taxes on flour sales. These taxes are not only driving up costs but also creating significant operational challenges for flour mills, which are being forced to act as FBR’s tax collection agents. The government should take responsibility for tax collection instead of delegating this role to flour mills.

In just a few days since the new tax policies have been implemented, the government’s heavy focus on raising taxes for compliant taxpayers is backfiring. Matters will worsen unless it shifts its focus to bringing non-payers into the tax net.