Taxes on milk supply chain to be rationalized

ISLAMABAD: Adviser to Prime Minister on Commerce and Industry Abdul Razzak Dawood has said the taxes applied to the milk supply chain would be rationalized to incentivize the formal sector to expand milk collection and processing units across the country and bring the dairy farmer into the formal sector.

He was talking to a delegation of International Finance Corporation, World Bank on policy options to revive the growth of dairy sector in Pakistan, Press Information Department PID reported.

“The taxation policy for the dairy supply chain must be re-aligned for government’s broader socio-economic objectives with the nutritional requirements of the population,” he said

Processed milk, being an essential commodity, remained under the zero rated sales tax regime from 2006 till 2016. However, the incentive was withdrawn in 2016 and sales tax was reapplied.

As the demand of packaged milk is highly elastic and very sensitive to price, the imposition of sales tax led to a decline of domestic market by 30% and the formal processing units registered a drastic 80 percent decline in profits.

This forced manufacturers to cut down costs and close milk collection points across the country and the farmers starting shifting back to the informal market.

Advisor emphasized over the need to reverse this trend and bring the dairy farmer back into the formal eco-system where the farmer can work in partnership with formal sector companies to improve the health and yield of the livestock.

He also stressed the need to take a whole of government approach to revive the livestock sector, by focusing on reducing the regulatory and taxation burden, improving productivity and supply chain management.[the_ad id=”31605″]

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