Flour mills in Bahawalpur, Bahawalnagar, Jhelum, Kamalia, Sargodha, and Toba Tek Singh have been shut down as part of a nationwide strike against the newly imposed withholding tax. The Pakistan Flour Mills Association (PFMA) initiated the strike, which has resulted in the closure of hundreds of mills across the country for the second consecutive day, halting wheat grinding and flour supply and raising concerns of a potential shortage.
The federal government recently introduced a withholding tax on different stages of the supply chain for staple foods, including flour, with rates as high as 5.5%. PFMA leaders argue that this tax makes flour more expensive and burdensome for both millers and consumers. The strike aims to pressure the government to reconsider and lift this tax.
Flour mills in several cities, including Bahawalpur, Bahawalnagar, Jhelum, Kamalia, Sargodha, and Toba Tek Singh, have stopped operations, disrupting the supply of this essential commodity. Speaking to the media, Shahzad Qureshi, Senior Vice Chairman of PFMA’s Peshawar Division, stated that the strike will persist until their demands are met. He emphasized that the increase in tax on flour and wheat has forced the mills to cease operations.
Qureshi also called for the removal of restrictions on the delivery of wheat and flour from Punjab and demanded that the provincial government abolish check posts that hinder the delivery of wheat. He insisted that these measures are necessary to ensure the smooth supply of flour across regions.
Asim Raza, Chairman of PFMA, explained the situation in detail, highlighting that the government has not directly imposed taxes on flour mills but has designated them as withholding agents. This means that flour mills must withhold and deposit taxes on behalf of the dealers to whom they sell the commodity. Wholesale dealers, in turn, must withhold taxes when selling to retailers, charging a 2.5% withholding tax for non-filers and 0.5% for filers. Ultimately, when payments return to the flour mills, they must withhold an additional 5.5%.
Raza stressed that this system of advance tax collection is problematic for the flour milling sector and will lead to increased flour prices, further burdening consumers. He pointed out that the price of a 20kg flour bag, which was Rs2,800 a few months ago, had decreased to Rs1,800, and a 10kg bag had dropped from Rs1,400 to Rs900. However, he warned that these prices will likely rise again due to the new tax regime.
The PFMA chairman clarified that the strike is not intended to trouble the public or provoke a confrontation with the government. He emphasized that the flour milling sector has historically been exempted from being a withholding tax agent and argued that similar exemptions should continue. Raza noted that other sectors, such as fertilizer dealers and manufacturers, remain exempt from such requirements, and he asserted that the flour milling sector cannot operate under the current withholding tax obligations.
The ongoing strike highlights the tension between the PFMA and the government over tax policies and their impact on essential commodities. The PFMA’s demands for the lifting of the withholding tax reflect broader concerns about the economic strain on both the industry and consumers. As the strike continues, the potential for a flour shortage looms, urging both parties to seek a resolution to avoid further disruptions and economic hardship.
