Flour mills warn of strike on tax issue

Published June 23, 2021
The flour millers on Tuesday threatened to go on a two-day token strike starting from Thursday (tomorrow) unless the federal government withdraws 17pc sales tax on choker and restores the previous rate of 0.25pc turnover tax. — Reuters/File
The flour millers on Tuesday threatened to go on a two-day token strike starting from Thursday (tomorrow) unless the federal government withdraws 17pc sales tax on choker and restores the previous rate of 0.25pc turnover tax. — Reuters/File

LAHORE: The flour millers on Tuesday threatened to go on a two-day token strike starting from Thursday (tomorrow) unless the federal government withdraws 17pc sales tax on choker and restores the previous rate of 0.25pc turnover tax.

Addressing a press conference here, the provincial chief of the Pakistan Flour Mills Association, Asim Raza, said the millers would stop wheat washing process on Wednesday (today) and stop grinding for the next two days throughout the country.

“If demands are not met by 30th, the mills throughout Pakistan would be shut down and national flour supplies would be suspended,” Asim, flanked by the KP millers and Sindh (online), told the media.

He added the turnover tax issue seemed to be heading towards a resolution as the government had conceded mistake and promised not to implement it.

The decision to exclude flour mills from this tax was tweeted by the Federal Board of Revenue 9FBR) spokesman and it generated hope for the millers. However, it is still to be formally conveyed and implemented.

“Its formal abolition is included in the list of demands by the millers and any delay can result in nation-wide strike,” Mr Asim warned.

According to the background to the issue, the current budget increased turnover tax from 0.25pc to 1.25pc, provoking the millers to launch a protest.

According to the millers, the government hiked wheat price to facilitate farmers. The price was taken from Rs1,400 to Rs1,800 per maund this year. This 30pc increase in wheat price would naturally reflect in the flour price, hiking the millers’ turnover by 30pc – without enhancing their income.

Taxing this turnover, which is result of a default condition of farmers facilitation, is unfair to the millers. It should either be abolished or reflected in flour price, the millers maintain.

The second issue that pushed the millers to go for a strike is proposed levy of 17pc sales tax on choker – a by-product of wheat grinding.

“It was levied by 8pc in 2015 but withdrawn as the millers started protesting. It is proposed again in the current budget. Its recovery would be an uphill task for the millers. There is no formal market for choker. It is purchased by animal owners who use it to feed livestock. It is virtually impossible for millers to recover it from those small farmers. The millers would end up paying it from their own pockets and pass it on to the consumers. Under this head alone, price of a 20kg bag would go up by Rs55 to Rs60 – depending on how much choker a mill extracts. It would be totally disastrous increase in flour price and create problems for everyone, including the industry. It is on this basis, the millers are demanding ending this proposed tax,” Asim told his audience.

There is yet another layer of confusion, he added. “Choker is a by-product of flour mills. All wheat products and its by-products are exempted from sales tax and there are a number of rulings by the courts in this regard. How and why finance ministry has decided to slap it, no one knows,” Asim concluded.

Published in Dawn, June 23rd, 2021

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