Starting July 1, Pakistani consumers will see a Rs50 per liter increase in the price of packaged milk due to the implementation of an 18% General Sales Tax (GST), as reported by Business Recorder.
Industry sources have expressed grave concerns over the new tax policy, warning that the proposed 18% sales tax could devastate the formal dairy sector, potentially causing it to shrink by over 70%. The imposition of this indirect tax is expected to result in at least Rs23 billion in losses for farmers, who are still reeling from the government’s mismanaged wheat imports during the caretaker period.
Sources highlighted that the formal dairy industry plays a crucial role in improving farmers’ living standards through consistent milk purchases. They emphasized the severe nutritional issues in Pakistan, noting that 40% of children suffer from stunted growth, 29% are underweight, and 18% are scrawny due to malnutrition. With 90% of the population consuming fresh, unprotected milk and only 10% using packaged milk, the new tax could exacerbate these problems.
While the dairy industry supports taxation for national development, stakeholders argue that the government must ensure a level playing field to allow fair competition.