Tea importers raised concerns over the Federal Board of Revenue’s (FBR) recent decision to set a minimum retail price (MRP) of Rs1,200 per kg, fearing a price hike and an increase in smuggled tea entering the market.
The Pakistan Tea Association (PTA) cautioned that this fixed MRP could push up the cost of imported tea by Rs150-300 per kg, impacting consumers nationwide.
PTA Chairman Mohammad Altaf stated that the MRP mandate ignores the variation in global tea prices, which range from $0.50 to over $3 per kg, depending on the type and quality. In addition, tea imports vary in packaging, with bulk shipments often exceeding 5 kg.
Many in Pakistan rely on tea as a daily staple, with its affordability crucial to consumers across different socio-economic groups. Altaf warned that the fixed MRP could incentivize the influx of low-quality tea through illegal channels, ultimately harming both the trade and government revenue.
Altaf highlighted that an 18% general sales tax is already applied to imported tea, making further tax burdens problematic.
The PTA contends that imported tea should be treated as “raw material” when used in blending, mixing, or packaging, a classification outlined in the Sales Tax Act of 1990. According to Altaf, sales tax should be levied on the import value rather than a set retail price, as these processes add value to the product post-import.
He also noted that tea prices vary significantly by brand, quality, and packaging, with most consumers purchasing tea at rates between Rs700 and Rs950 per kg.
Applying a uniform MRP would disrupt the supply chain, especially affecting wholesalers and distributors who play key roles in the market. The PTA has expressed concern that a fixed retail price at the import stage may reduce the competitiveness of domestic distributors and limit commercial imports.
