Flour millers on strike against withholding tax

LAHORE: Flour mills in several cities of the country have stopped wheat grinding and flour supply across the country from today (Thursday), prompting fears of a flour crisis, as they observe a strike against the newly imposed withholding tax. In the budget 2024-25, the government has imposed withholding tax on different stages of the supply chain of staple food by up to 5.5%, the flour mills association leaders said, making the product more expensive.

Central Senior Vice Chairman of Pakistan Flour Mills Association (PFMA) had said that the authorities had also asked the mills to collect another 2.5% and 2% withholding tax on the sale of flour from non-filer retailers and wholesalers, respectively.

Meanwhile, PFMA Chairman Asim Raza reiterated that the mills would not bear the responsibility of collecting the withholding tax as it made the flour dearer by Rs200. The PFMA said at least 1,725 flour mills had ceased their operation across the country, including 1,100 in Punjab, 300 in Khyber Pakhtunkhwa, more than 300 in Sindh and 25 in Balochistan.

Additionally, it also said flour consumption during summer was 40-45,000 tonnes in the country. After the announcement of strike by the PFMA against the withholding tax, 73 flour mills of Gujranwala district are completely shut down, whereas, all 100 flour mills are closed in the four districts of the Multan Division, including 60 flour mills in Multan.

According to the spokesperson for PFMA, due to the closure of flour mills in Faisalabad, the supply of 200,000 bags of flour per day has stopped, while all 10 flour mills in Kamalia city and four flour mills in Khushab district are closed.

On the other hand, the strike is being observed in Peshawar and Quetta too, where mills have been locked. PFMA Chairman (South Zone) Aamir Abdullah said flour mills in Sindh had stopped grinding wheat and the supply of flour as well.

“Tax collection is the FBR’s job, we should not be made tax agents. Until our demands are approved, the supply of wheat products will remain closed,” he said. Flour mills association sources warned it was feared that the commodity would go scarce if the deadlock between the government and association persisted.

As per the association, flour bags of 5kg, 10kg and 20kg will not be prepared from today. It should be noted that a few days ago, flour mills owners had announced a strike. Holding a press conference, they said that they had tried to negotiate with the government. They had conveyed their demands to the government but negotiations failed.

Meanwhile, an office-bearer of the Pakistan Flour Mills Association said that negotiations were held with FBR officials twice through video link and zoom, but they did not yield any results. He reiterated that 4.5 percent withholding tax on the flour supply chain and 5.5 percent withholding tax on flour mills should be abolished.

The PFMA leader claimed that WHT to be collected from the supply chain on behalf of the FBR is greater than the grinding charges being earned by mills. He questioned how a flour mill owner could manage such a cash flow to satisfy the government’s move of collecting tax.