Pakistan Flour Mills end strike, resume operations as government promises tax relief

PAKISTAN — Flour mills across Pakistan have resumed operations after the Pakistan Flour Mills Association (PFMA) called off its strike, the Express Tribune reported.

The strike, initiated on July 11, was in protest against the imposition of a 5.5% withholding tax on flour mills by the Federal Board of Revenue (FBR), which significantly raised flour prices by Rs 8-10 per kilogram, exacerbating the food crisis in Pakistan.

This action was in response to the Federal Board of Revenue (FBR) shifting the responsibility of revenue collection onto the mills, following its own challenges in tax collection.

The PFMA called off the strike after the government assured them of a resolution within 10 days. The strike had paralyzed wheat processing in over 1,600 flour mills across the country, causing a temporary disruption in flour supply and contributing to a surge in black market activity.

The Flour Dealers Association also resumed flour supply, leading to a decrease in flour prices and stabilizing the market​.

Government officials, including representatives from the Ministry of Finance and the FBR, engaged in negotiations with PFMA leaders. The government pledged to reconsider the withholding tax by July 22, a critical factor for the mills to avert an indefinite strike if their demands were not met​.

The withholding tax policy has placed a significant burden on the flour mills, compelling them to act as tax collection agents for the FBR. This policy not only increased operational costs but also posed legal and logistical challenges for the mills​ .

The strike highlighted the broader implications of tax policies on food security in Pakistan. Wheat flour is a staple food, contributing 72% of the country’s daily caloric intake.

The World Food Program has reported that over 20% of Pakistan’s population is undernourished, with nearly 45% of children under five experiencing stunted growth due to malnutrition​.

The government’s commitment to addressing the PFMA’s concerns is crucial to ensuring a steady supply of affordable flour and mitigating the risk of a food crisis in the country.

The outcome of this dispute will be closely monitored by stakeholders in the food industry and the general public, as it directly impacts food prices and availability.

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