Flour supply disruption enters second day amid taxation dispute

LAHORE: Flour supply was discontinued for the second straight day on Friday across the country as mills observed a strike against taxation measures announced by the government.

Office-bearers of the Pakistan Flour Mills Association (PFMA) vowed to continue the strike indefinitely against what they call anti-flour mill measures, which make them act as collection agents for the Federal Board of Revenue (FBR). “We don’t want to create any trouble for the public and that is why the flour milling industry continued to supply flour from July 6 to July 10, particularly given the sanctity of Muharram,” they stated. “But it has become difficult for flour mills to continue their business due to the financial loss inflicted by the imposition of withholding tax (WHT).”

They said the FBR’s move is bound to increase flour prices and the government should take steps to withdraw such taxes. “We have already submitted all our demands to the authorities concerned, but no tangible steps have been taken,” they continued.

The PFMA leaders further claimed the strike of flour mills across the country was being successfully observed on the call of the association. They made it clear that it is not practical to be a withholding tax collection agent for flour wholesalers and flour mills because the amount that the wholesaler will withhold from the flour mills is much greater than the wheat grinding charges. “The strike of flour milling industry will continue until the demands of PFMA are accepted,” they stressed.

On the other hand, Khaleeque Arshad and Majid Abdullah of the Progressive Flour Millers Group were of the view that the government’s move to levy the tax led to a rise in the prices of flour, which had otherwise become cheaper after a long time. They demanded the government take remedial measures as soon as possible.

Meanwhile, as a result of the strike, the flour supply chain has been badly disrupted, causing a shortage of flour in pockets. It is feared that squeezing supplies would lead to a hike in the price of flour. According to the PFMA, the wholesale and dealership network of wheat products consists of small traders, and the majority of them are non-filers. The WHT has been imposed at a rate of 2 percent on non-filer dealers, 2.5% on retailers and 5.5% on flour mills. Hence, the accumulated rate of newly imposed taxes stood at 10%.

With the implementation of these taxes, the price of a 20kg flour bag would increase by Rs185, and the price of fine flour would increase by Rs800 per 80kg bag. They claimed that non-filers are reluctant to pay WHT to flour mills. Non-filer wholesalers and retailers expressed the fear that they would be made part of the tax net if they started paying these taxes.

Following partly drying of supply chain, shopkeepers in different areas of the metropolitan city and other districts of the province have started selling flour at higher prices by taking advantage of the nationwide strike of the Pakistan Flour Mills Association. Moreover, people have also started panic buying. If the trend continues, the situation of flour availability will become critical.