KARACHI: Pakistan Steel Melters Association has asked FBR to levy RD, sales tax or special CESS on imported steel products to balance the steel industry and not leave local industry at a cost disadvantage.
“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 as domestic units will ramp up production. Consumers too will benefit as a competitive environment will push prices down” said a representative of PSMA.
“With 5 million tons of steel capacity in our country, a 10% increase in industry capacity utilization will result in an additional 500,000 tons of domestic steel output and revenue generation for FBR of over PKR 3 billion. 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.”
“By imposing further regulatory duty and sales tax on imported steel, importers will still remain profitable in the market place while FBR can simultaneously mop up the surpluses on imported products and generate additional revenue by at least a few billion rupees. The government can impose regulatory duty, sales tax or special CESS depending on what is most compliant with trade agreements that GoP has signed in the past. For example, Sri Lanka has imposed special CESS on imported steel products even though they have an FTA with China.”
“Pakistan Steel Melters have seen the brunt of policy making over the past two years. 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.”
“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.
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.”
“We are expecting the government to increase regulatory duty on import of steel billets to at least 25%, bars and wire rods to 40%. Our members are waiting for such a policy decision to announce investment and expansion plans DNA