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Pakistan Poultry Association seeks reduction in taxes

Pakistan Poultry Association seeks reduction in taxes

Pakistan Poultry Association seeks reduction in taxes

Image: File

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KARACHI: The proposed taxes on poultry products will undo all the efforts put in by the industry to reduce and eliminate malnutrition, a statement said on Wednesday.

The Pakistan Poultry Association (PPA) patron-in-chief Kalil Sattar proposed a comprehensive plan to eliminate malnutrition, under-nourishment, stunting and wasting in children, it added.

The World Food Programme estimates that approximately 43 per cent of Pakistan’s population is food insecure and the main reason for malnutrition is an acute shortage of protein consumption.

“In order to fill in the protein gap and to provide additional poultry products there is a definite need to expand the poultry sector. The production of poultry should be rapidly increased at low input cost,” Sattar said.

But, the proposed budget makes it impossible to achieve this, he added.

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The poultry industry was growing 8 to 10 per cent annually for the last few years contributing significantly to the GDP, however, the proposed taxes on the poultry products will undo all the efforts put in by the industry to support the prime minister’s vision to reduce malnutrition.

Ironically, the steps taken to increase revenue collection will result in a negative growth of a steadily growing poultry industry, resulting in less revenue generation from the industry.

Prior to the proposed mini-budget, a grandparent day old chick, which cost $54 C&F, attracted 3 per cent custom duty and 2 per cent additional custom duty, a tax impact of Rs486.

“In the proposed budget, the proposed levy of 17 per cent sales tax would cost an additional Rs1735 and the total tax impact of sales tax and custom duties would be Rs2,221/grandparent chick,” PPA chief said.

“It is emphasised that without grandparents, no poultry production can take place. The increase in levy will definitely increase the cost of day old parent stock chicks as well,” Sattar noted.

Similarly, the poultry feed currently costs Rs86,200/tonne and 60 per cent of the input cost is of sales tax and import duties on micro and macro raw materials, which amounts to approximately Rs8000/tonne, which varies on different lines of feed and formulations.

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The sales tax has been increased from zero and 10 per cent upto 17 per cent on some of the aforesaid raw materials, which would further increase the input tax on feed cost by approximately Rs900/tonne.

“In the proposed budget, the sales tax exemption on vaccines has also been withdrawn. Average cost of medicines and vaccines in grandparent and parent stock production is approximately Rs475, and 17 per cent sales tax would increase the cost of vaccines and medicines by Rs80-90. This would also add to inflation,” Sattar said.

A 17 per cent sales tax levy on incubators would deter the expansion plans of the poultry industry as taxing inputs of poultry feed, vaccines and poultry machinery is no different than levying a sales tax on all forms of poultry farming i.e., grandparent, parent stock, broiler farming and final poultry products.

“It is proposed in the budget that processed chicken meat, packed and branded be subjected to 17 per cent sales tax. This would only further benefit the unorganised sector at the cost of the organised and documented sector.”

“Processed milk sector has been zero rated, enabling it to compete with the undocumented, unbranded and unpacked milk in the larger interest of consumers. This principle should be applied on processed poultry as well,” Sattar said.

The process industry bears heavy labour costs including contribution to social security, EOBI workers profit participation fund, payment to apprentices and handicaps etc.

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The cost of the unorganised live bird and street side slaughter wet market is negligible, as it pays no taxes at all whereas the organised sector pays all kinds of taxes and produces safe and healthy products.

“The proposed imposition and increase in levy of sales tax is inflationary. The snowball effect of the increase of sales tax on grandparents, poultry feed ingredients, poultry vaccines; poultry and feed milling machinery and equipment; and processed, packed and branded chicken meat would result in short supply.”

“Which would lead to increase in [the] prices of poultry products including eggs, live birds, [and] meat sold at wet markets as well as branded and packed meat defeating the prime minister’s vision and adding further to the inflation.”

“Poultry production should be treated at par with milk production, which is zero rated, as poultry is the quickest and most economical way of filling in the protein gap,” Sattar said.

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