Plant owners call for tax cut on packed milk

Islamabad:Documentation of the economy is crucial not just for fiscal stability but also for tackling malnutrition and ensuring food safety, said Dr Abid Qaiyum Suleri, Executive Director of SDPI, Dr Suleri was speaking at a focused policy dialogue on ‘Enabling dairy sector transformation through smart taxation’ organised here by Sustainable Development Policy Institute (SDPI).

Dr Suleri said that despite contributing significantly to economic activity, over 90% of Pakistan's dairy sector remains undocumented and untaxed. He emphasised that the current tax policy, particularly the 18% GST on packaged milk, disincentivises the formal sector and undermines both public health and economic development.

Dr. Umar Farooq also from SDPI revealed that the sales tax hike led to a 20% drop in packaged milk sales and closure of over 500 formal milk processing units, redirecting Rs1.3 trillion in revenue to the informal sector. “This is a fiscal miscalculation. Globally, milk is taxed at an average of just 6%. Pakistan’s 18% GST on packaged milk is a policy outlier that compromises health, nutrition, and livelihoods,” he stated.

Muhammad Nasir of FrieslandCampina Engro Pakistan, stressed the sector's socio-economic importance, especially in rural areas. Dairy acts as a social safety net, yet our productivity remains among the world’s lowest, he said. He also flagged Pakistan’s alarming 40% stunting rate and warned that increased taxation on packed milk could worsen national nutrition indicators.