Imposition of Reformed General Sale Tax (RGST) on poultry feed would increase its price by Rs 5600/ton, pushing up farmers' cost of production and consumer price by a minimum of Rs 31.50/kg. This was stated by the Khalil Sattar Chairman Pakistan Poultry Association (PPA) while addressing a press conference here on Monday.
"Proposed withdrawal of zero rating on processed branded chicken will increase the consumer price by minimum 15 percent and inflation will increase price by almost 35 to 40 percent resulting in closure of processing plants," said Sattar. He said that the modernisation and value addition to poultry was meant to bring about stability in prices of poultry and foreign exchange earning by way of exports would be defeated by imposition of RGST.
Sattar further said that imposition of RGST on poultry feed would result in reduction of poultry production which would further result in increase in prices of not only mutton and beef but also flour, sugar, rice, oil, etc, because of the chain reaction due to reduction in consumption of the 5 million metric ton of agro by-products such as wheatbran; maize and maize residue; rice polishing; rice bran; rice husk; molasses; fish meal, oil seed residues and many other agro by-products.
He said that the federal government could enter into an agreement with the Provincial government to collect income tax on agriculture as is being done in the proposed RGST Bill for collecting sales tax on services. Almost the entire developed world provides zero rating of Sales Tax on food production as also being done by UK as per VAT Act of 1994, Schedule 8 Group 1 which specifies food of a kind used for human consumption, zero rated, he added.
He asked all the parliamentarians to not approve the levy of RGST on poultry feed and processed branded chicken to save the consumers from the burden of already escalating food prices. In the RGST Bill 2010, presented by the government in the National Assembly the amendments made therein in the Sales Tax Act would result in the withdrawal of exemption of sales tax on poultry feed and its raw materials and also all other inputs of poultry feed like vitamins, minerals, amino acids, etc.
He further said that 100 percent poultry feed is supplied on credit. The additional cost of Rs 5600 per ton would create serious liquidity problems for the feed mill adversely affecting supplies and availability of feed for the farmers, which ultimately will add to the reduction in production of poultry products.
A levy of Sales Tax on poultry feed in 1996, resulted in a drop of 45 percent in production of poultry products triggering a spiral in prices of not only chicken and eggs, but also all other meats, Sattar added. He further said that the entire agriculture chain would be impacted by decline in poultry production. Poultry feed industry currently consumes five million ton of agricultural residues or by-products.
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