LAHORE: Packaged milk prices will likely surge by Rs55 per litre after an 18 per cent general sales tax takes effect from July 1.

The implementation of the 18pc General Sales Tax (GST) is expected to hit consumers hard, potentially leading to a surge in inflation. This could particularly affect those living in major cities and towns, who may see their grocery bills increase significantly.

Moreover, the indirect sales tax is projected to cause farmers a substantial loss of around Rs23 billion, who are already grappling with the aftermath of the government’s wheat imports during the caretaker setup.

The industry stakeholders have expressed concerns, stating that the tax would diminish farmers’ profits, making it difficult for manufacturers to purchase milk from them.

“The government’s decision to impose an 18pc sales tax on packaged milk has raised apprehensions among manufacturers and other stakeholders in the country’s small yet regulated packaged milk market,” commented a source in the industry.

Prime Minister Shehbaz Sharif and his economic team, led by Finance Minister Muhammad Aurangzeb, are exploring avenues to boost government revenues by expanding the tax base and eliminating energy sector subsidies. This aligns with the IMF’s conditions for securing a new loan facility for cash-strapped Pakistan.

Published in Dawn, June 23rd, 2024