The increase in steel prices will have adverse effect on construction activities and finally slow them down. The government had imposed different kinds of taxes on steel industry in the last budget without considering their negative impact on the stakeholders. The industry had proposed the government to impose reasonable tax on it in the previous budget but its proposals were overruled by the Federal Board of Revenue (FBR).
The steel industry had held series of meetings with FBR chief Abdullah Yusuf and his team of members to protest over huge taxes. It demanded review of the new taxes and demanded their review altogether.
Sources said the steel industry is in trouble as its deadline for filing the annual returns comes closer. The industrialists are not clear on taxes rates and their overall taxes to file returns. The steel industry deadline for filing the return is August 15.
After a series of meeting with steel industry stakeholders, FBR had imposed fixed sales tax Rs 3800 per ton at melting stage (billet) and Rs 617 per ton at re-rolling stage (bars) and industry accepted it without any hesitation to give an impression to the government that it was readily available to contribute its share for revenue generation.
The fixed sales tax at two stages is enough to increase FBR revenue at least four times as compared to the last year. But, the new taxes such as 1 percent, excise duty, 3.5 percent income tax for non-corporate sector, which counts 95 percent for the steel industry, came as a big surprise for the steel sector stakeholders.
They have approached FBR for more than once to reversal of the new taxes. The FBR chief agreed with steel industry office bearers to consider their demand and reverse unnecessary taxes but its implementation is yet to become true.
The new taxes on steel industry are negation of the government policy of simplifying the taxes procedure for the taxpayers as different taxes have made the industry hostage to the tax machinery. The government should review the policy overtaxing the steel industry just to get more and more revenue from this sector. It should also consider its negative impact that can hit hard the whole economic activities in the country.