Pakistan Dairy Association (PDA) on Saturday urged the government to exempt the packaged dairy products from the imposition of value-added tax (VAT), saying that the new tax would make the essential commodity costlier. Speaking at a press conference at a local hotel, chairman of PDA, Sarfaraz A Rehman hoped that the government would rethink about the VAT on dairy products.
However, made it clear that if the tax was imposed then its cost will would pass on to consumers. He appealed to the government to spare the packaged dairy products as it had exempted wheat being essential commodity from VAT. He said that the wheat consumption in the country was 11 percent whereas use of dairy products was 23 percent, which made it more essential than wheat.
As an agriculture commodity, the size of dairy sector of the country was Rs 300 billion, while wheat is Rs 160 billion, he said and warned that the spiral upward trend in the prices of all related commodities would unleash with VAT imposition.
The prices of livestock will begin jumping to new highs with rise in dairy products from VAT imposition, as a result, the price of meat and vegetable will also start going up, he maintained. Sarfaraz pointed out the companies had invested some 1.5 billion dollars in the dairy sector while the investors had planned to expand the sector with further investment of 0.5 billion dollars. However, he expressed fears that imposition of VAT would discourage them not to invest the amount for expansion of the sector.
He pointed out that he had meetings with the parliamentary VAT committee, hoping the government would not bring this sector under VAT imposition. Chairman PDA said that Pakistan being the fourth largest milk producing country was importing milk of 60 million dollars and warned that the import bill could further swell if decline hit the dairy sector in terms of production.