New Tax on Milk in Pakistan: Prices Rise Sharply in Karachi in 2024
Karachi: Milk prices in Pakistan have increased significantly due to a new tax, making milk more expensive in Karachi than in many developed countries like France and Australia. This guide will explain the impact of the new tax, the current prices, and its implications for the people of Pakistan.
Overview of the Milk Price Hike
New Tax Details
- Tax Rate: An 18% tax has been applied to packaged milk.
- Previous Status: Packaged milk was previously tax-exempt.
- Budget Change: The tax is part of new taxation changes approved in the national budget last week.
- Effect: The tax has caused retail milk prices to rise by up to 25%.
Current Milk Prices
- Karachi: Ultra-high temperature (UHT) milk costs Rs370 ($1.33) per liter.
- Comparative Prices:
- Amsterdam: $1.29 per liter.
- Paris: $1.23 per liter.
- Melbourne: $1.08 per liter.
Source: Bloomberg.
Impact on Pakistani Consumers
Economic Impact
- Rising Inflation: The increase in milk prices adds to the growing inflation in Pakistan.
- Spending Power: Stagnant wages mean people have less money to spend, which is eroding their spending power.
- Living Costs: Higher milk prices contribute to the overall cost of living, making it harder for families to afford basic necessities.
Health Concerns
- Malnutrition: The price hike may worsen malnutrition among Pakistanis.
- Children’s Health:
- Anemia: 60% of children under 5 in Pakistan suffer from anemia.
- Stunting: 40% of children under 5 suffer from stunting.
Source: Bloomberg.
Poverty and Nutrition
- Poverty Rate: About 40% of Pakistan’s population lives in poverty.
- Nutrition Impact: The higher cost of milk will deny essential nutrition to a large part of the population, especially affecting children who need it most.
Statement from Muhammad Nasir, Royal FrieslandCampina NV: “The increased cost will deny nutrition from a population that is already suffering from malnutrition.”
Reasons Behind the Tax Increase
Government Budget Requirements
- Tax Increase: Taxes were raised by 40% in the recent national budget, the highest increase on record.
- IMF Conditions: The tax hike is aimed at meeting conditions set by the International Monetary Fund (IMF) for a new bailout.
Source: Bloomberg.
Conclusion
The new tax on milk in Pakistan has significantly increased prices, making it more expensive than in many developed countries. This rise in cost impacts the economy by contributing to inflation and reducing spending power, while also potentially worsening malnutrition, especially among children. The tax increase was implemented as part of the government’s effort to meet IMF requirements, but it poses serious challenges to the population’s health and well-being.
References:
- Bloomberg: Link to Bloomberg source.
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