Dreading the price tag: 7% sales tax on bran, 0.6% WHT draws ire of flour mill owners

Say implementation will force them to increase prices of goods

PESHAWAR: Members of the Pakistan Flour Mills Association have rejected the 7% sales tax imposed by the federal government on wheat bran and 0.6% withholding tax (WHT) on banking transactions over Rs50,000. In protest, they warned they would stop the supply of flour starting July 11 if the taxes were not revoked.

Talking to The Express Tribune on Wednesday, Flour Mills Association Khyber-Pakhtunkhwa Chairman Naeem Butt said, “We strongly reject such taxes as these will cause [a chain reaction and  increase] the price of food products and will eventually burden the public.

The millers will have to increase the price of a sack of flour by Rs20 while the withholding tax on bank transactions will add another Rs10 to the prices,” added Butt.

The chairman criticised the government for imposing such taxes and said that there was no country in the world where sales tax was enforced on food items. “It is only in Pakistan that even flour is not spared.”



Butt warned the federal government to take back the decision within three days otherwise they would stop producing and supplying flour to markets, starting July 11.

Although the tax is only imposed on bran, according to the chairman of the association, it will cause a ripple effect and subsequently raise other prices.

Withholding tax

Like traders in the rest of the country, members of the association were perturbed by the implementation of the withholding tax on bank transactions worth over Rs50,000 a day. The tax is being levied on non-filers of tax returns and traders and flour mills owners believe it will negatively impact weak industries of the province. Flour mills have been protesting the move since several days.

Butt said such decisions would end up promoting the Hundi culture (wherein money is transferred informally) and will prompt people to not trust banks.

Published in The Express Tribune, July 9^th, 2015.