KARACHI: S. M. Tanveer, patron-in-chief of UBG, has appraised that, in order to broaden the tax base and bring the flour mills under the tax net, the government should revert the illogical, impractical and regressive withholding tax imposed in the federal budget 2024–25.
Wheat is the most consumed food commodity the indispensable staple food of the country of 249 million people; and, FPCCI denounces any step to disrupt the supply chain of this essential item, he added. It is pertinent to note that a high-profile delegation of Pakistan Flour Mills Association (Sindh) conduced a joint meeting with FPCCI to propose changes to the government on taxes imposed on flour mills.
S. M. Tanveer explained that the WHT has been imposed at a rate of 2.5 percent on non-filer retailers and 5.5 percent on the flour mills; whereas they operate on a meager profit margin of 0.5 – 1.0 percent. Therefore, this taxation measure is not only counter intuitive for defying any economic sense; but, will also be counterproductive in revenue generation. At FPCCI, the apex body, the reading of the pulse is that it will decrease the tax collection from the sector, he added.
Saquib Fayyaz Magoon, Acting President FPCCI, stressed that only a fixed tax in the range of 0.5 – 1.0 percent can work and add into national tax collection end of the day; and, the prudence behind the proposal is that flour mills will be willing to pay as it will not affect their supply chain; will not hold up their working capital and will be easier to comply. These mills have been exempt previously for advanced taxation under section 153, he added.
Saquib Magoon reiterated FPCCI’s stance that the taxes which are regressive in nature and difficult to comply may give a boost to the practice of flying invoices; as small traders like flour millers may opt for them as the last resort to continue to sell to the retailers – if the government does not listen to their legitimate concerns.
Copyright Business Recorder, 2024
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