Pakistanis face 25% increase in packaged milk prices amid tax implementation

The cost of packaged milk has surged dramatically, with prices soaring by Rs75 per liter or 25 per cent as the federal government’s pro-IMF budget took full effect on July 1st.

Effective immediately, consumers are now paying Rs370 per litre, up from Rs295 in the previous fiscal year. This increase is primarily driven by an 18 per cent sales tax and an additional 2.5 per cent tax on retailers, according to reports.

In response to these economic pressures, a leading dairy company has announced a price adjustment for its milk products starting July 1, 2024.

Citing escalating production costs and broader economic influences impacting the dairy sector, the company emphasised the necessity of this adjustment in its latest advertising campaign.

The price hikes extend beyond this company, as other vendors have similarly adjusted their rates to reflect the new taxation policies outlined in the Finance Bill 2024. These measures include the imposition of an 18 per cent sales tax and a 2.5 per cent tax on retailers, collectively aimed at augmenting government revenue.

Notably, the government has proposed an 18 per cent tax on infant milk products priced not exceeding Rs600 per 200g, anticipating a substantial revenue impact of approximately Rs95 billion. This figure includes Rs75 billion from standard milk sales and an additional Rs20 billion from infant milk products.

Addressing concerns over the impact of these increases, Finance Minister Muhammad Aurangzeb reassured the public during a post-budget briefing on June 13 that the middle class should not face undue hardship in meeting the new tax obligations on milk products.