The Karachi Chamber of Commerce and Industry (KCCI) has called on the government to immediately withdraw the newly imposed Minimum Retail Price (MRP) of Rs1200 per kilogram on the import of black tea, warning that it will disproportionately impact lower-income households and legitimate importers.

In a statement issued from KCCI today, President Muhammad Jawed Bilwani expressed strong concerns over the Federal Board of Revenue’s (FBR) decision to enforce the MRP on bulk tea imports, a move he argued would exacerbate the financial burden on the lower and lower-middle classes. ‘This regulation will not only penalize legitimate tea importers with higher taxes but also make tea unaffordable for the poorest segments of society,’ he said during a meeting with a delegation from the Pakistan Tea Association (PTA) at the KCCI office.

Bilwani pointed out that setting a flat MRP for all types of imported tea, regardless of its varying costs -ranging from $0.80 to $4.50 per kilogram- would result in higher sales tax evaluations and, ultimately, an increase in tea prices. He stressed that this would further strain households already grappling with rising inflation.

The KCCI president also highlighted the issue of tax exemptions granted to FATA/PATA regions, which have led to widespread misuse and tax evasion. ‘During the 2023-24 fiscal year, 23 million kilograms of tea were imported under these exemptions, with a significant portion being diverted to markets across the country,’ Bilwani revealed. He warned that this practice is costing the national exchequer an estimated Rs25 billion annually.

The PTA, represented by Chairman Muhammad Altaf, also voiced strong opposition to the MRP regulation, noting that the tea industry operates in bulk imports, followed by processes such as blending, mixing, and packaging before reaching consumers. Altaf argued that black tea, being a raw material, should be taxed based on its import value, as stipulated under the Sales Tax Act of 1990, rather than imposing a flat MRP, which could increase prices by Rs150 to Rs300 per kilogram.

In response, PTA requested KCCI’s support to address these issues, warning that continued enforcement of the MRP could result in significant losses for tea traders and a reduction in national revenue. ‘If this trend persists, we fear that the revenue losses by the end of this fiscal year could be substantial,’ Altaf added.

Both the KCCI and PTA emphasized the need for a more balanced approach to taxation and regulation, one that ensures fair competition and does not unduly burden consumers.