Lahore - Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and the Pakistan Steel Melters Association (PSMA) has urged the Federal Board of Revenue (FBR) to levy RD, sales tax or special cess on imported steel products to balance the steel industry.
FPCCI vice president Hameed Akhtar Chadda said that balancing various segments of the steel industry is crucial to achieve a win-win situation. By increasing taxation on imported products, FBR will be able to mop up the surpluses on imported products and gain maximum revenue while domestic units will also ramp up production.
Vice President of SAARC Chamber and FPCCI former president Iftikhar Ali Malik said that with 5 million tons of steel capacity in our country, a 10% increase in industry capacity utilisation will result in an additional 500,000 tons of domestic steel output and revenue generation for FBR of over Rs 3 billion.
He said that by providing an environment of fair competition where the inputs of each sector are equalized by levying the appropriate amount of tax on each segment, industry capacity utilization will increase. Moreover, considering a conservative billet import figure of 250,000 tons, FBR stands to gain at least 3 billion rupees via direct taxation on imports through additional taxation at import stage to balance the sector.
Iftikhar Malik said that FBR needs to keep a long term view. Levying additional taxes on imported products will level the playing field and thus allow our local steel industry to invest in new capacity and technologies. These investments will pay FBR in perpetuity whereas imported products become unviable when the global economy starts expanding. Saarc Chamber VP said that new investments also create jobs and have a multiplier effect on the economy that imported products don’t. Since future demand outlook is strong for the steel industry, correct policy making will attract investment in our steel industry.”
He said that during last fiscal year, sales tax was increased on steel melters by a whopping 75% and energy prices were increased by 74%. This year 5% RD was levied on steel scrap, which is a raw material for the industry.
Since the 15% RD on steel finished products has been nullified due to a decrease in international prices by the same percentage, steel melters have been put at a huge disadvantage against imports. It is now imperative that FBR level the playing field by levying additional sales tax and regulatory duty on imported products.