LAHORE – Pakistani flour millers' strike over newly imposed taxes entered its second day, raising fears of flour shortages in various parts of the country. 

The Pakistan Flour Mills Association (PFMA), representing over 900 mills, initiated the strike on Thursday in response to a 5.5 percent withholding tax on flour sales introduced in the federal budget for fiscal year 2024-25, effective from July 1.

The PFMA has also raised concerns about additional taxes imposed by the government, including a 2.5 percent withholding tax on essential commodities sold to non-filing retailers and a 2 percent tax from non-filing wholesalers. Moreover, the association highlights the requirement for flour mills to collect a 0.5 percent tax on flour sales to filing retailers and a 0.10 percent tax from filing wholesalers.

Approximately 1,600 flour mills, employing around 4,000 workers, have shut down across Pakistan due to the strike. 

This strike comes at a time when Pakistan is navigating economic challenges, including double-digit inflation and a worsening macroeconomic crisis. 

The country is striving to attract foreign investment and secure a bailout from the IMF to support its fragile $350 billion economy. 

The tax-heavy budget, aiming for a tax revenue target of Rs13 trillion ($46.66 billion) for the current fiscal year, has faced rejection from major trade bodies and opposition parties. The government introduced these measures amidst IMF negotiations, which demand tax reforms and increased revenue as prerequisites for a new loan program.