Packaged Dairy Industry Calls for Fair Taxation to Boost Consumption
ISLAMABAD: The Pakistan Dairy Association (PDA) has urged the government to reassess its taxation policies, arguing that excessive taxes and duties are inflating prices and discouraging the consumption of packaged dairy products.
In a letter addressed to the Ministry of Industries and Production, the PDA emphasized that while Pakistan ranks as the third-largest milk producer globally, the high tax burden is stifling the industry and promoting the circulation of substandard milk.
The association pointed out that Pakistan is the only country imposing an 18% General Sales Tax (GST) on packaged milk, which is significantly hampering the growth of the sector.
Industry Leaders Advocate for Reform
During a recent meeting, a delegation led by PDA Chairman and Fauji Foods Managing Director, Usman Zaheer, met with Special Assistant to the Prime Minister, Haroon Akhtar Khan, to discuss the pressing issues faced by the industry. Other key attendees included PDA Vice-Chairman and FrieslandCampina Engro Pak Managing Director Kashan Hassan, PDA CEO Dr. Shahzad Amin, Noor Aftab, Head of Corporate Affairs at Tetra Pak, and Dr. Muhammad Nasir.
The PDA underscored that milk is a staple in the average Pakistani diet, and its rising cost is exacerbating malnutrition.
In an interview with Dawn, PDA Chief Executive Dr. Shahzad Amin explained that consumers rely on two primary sources of milk: packaged and fresh. However, quality enforcement remains inconsistent in the open market, putting consumers at risk.
Call for Tax Reduction
Dr. Amin urged the government to revise its taxation policies, specifically calling for a reduction in GST. This, he argued, would help maintain a stable milk supply at reasonable prices while supporting the growth of the dairy industry.
“Milk and dairy products like cheese, butter, ghee, cream, and lassi are not luxury items; they are essential commodities,” he asserted.
The imposition of high taxes in the current fiscal year has led to a more than 20% decline in packaged milk sales.
“Last year, milk processing averaged around 1,000 million liters. However, following the implementation of the tax, this volume has dropped to approximately 800 million liters per day,” Dr. Amin revealed.
Rising Costs Beyond Taxation
Beyond taxation, industry representatives noted that increasing electricity tariffs and import duties on dairy processing equipment are further inflating operational costs, making it harder for businesses to remain viable.
The PDA continues to advocate for a more business-friendly tax regime to ensure affordability for consumers while safeguarding the industry’s future.
Frequently Asked Questions (FAQs)
1. Why is the Pakistan Dairy Association advocating for tax reductions?
The PDA argues that high taxation on packaged milk is inflating prices, reducing consumer access, and contributing to malnutrition.
2. How has the tax on packaged dairy affected milk consumption?
The 18% GST on packaged milk has led to a sales decline of over 20%, as consumers opt for cheaper but potentially lower-quality alternatives.
3. What other challenges does the dairy industry face apart from taxation?
In addition to high taxes, the sector is burdened by rising electricity costs and import tariffs on machinery, making production more expensive.
4. How does Pakistan compare to other countries in taxing dairy products?
Pakistan is the only country imposing an 18% GST on packaged milk, a move that industry stakeholders argue is unique and harmful.
5. What are the potential benefits of reducing taxes on dairy products?
Lowering taxes would make packaged milk more affordable, promote better nutrition, and help the industry expand, ultimately benefiting consumers and producers alike
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