Zubair Yaqoob
Tea prices in Pakistan are on the verge of a significant increase, with importers and packers planning to raise costs by Rs 100 to Rs 200 per kilogram. This decision comes in light of the Federal Board of Revenue’s (FBR) recent announcement to hike sales tax rates on both locally produced and imported tea. The FBR has issued S.R.O. 1735(1)/2024, which establishes a minimum retail price of Rs 1,200 per kilogram for tea to facilitate the payment of sales tax. This move is expected to exacerbate the financial burden on consumers who are already dealing with rising prices for essential goods, including oil, ghee, and sugar. Local manufacturers and importers typically transfer increased operational costs, including those from government-imposed taxes, directly to consumers. A representative from a local tea packaging company stated, “When the government raises taxes, we have no choice but to adjust our prices accordingly.” Industry experts have raised concerns that these ongoing price hikes may lead to decreased tea consumption, compounding the economic challenges faced by many households. An economic analyst warned, “As prices rise, many will be forced to cut back on non-essential items, including tea.” Consumer advocacy groups have criticized the FBR’s decision, arguing that it disproportionately affects low-income households. With inflation continuing to put pressure on family budgets, the anticipated rise in tea prices is expected to add to the financial strain many Pakistanis are experiencing. Data from the Food and Agriculture Organization (FAO) indicates that black tea consumption in Pakistan is currently estimated at 172,911 tonnes, projected to rise to 250,755 tonnes by 2027.
