13 November 2015

FBR losses Rs 17 billion on imports of finished steel products

KARACHI: Due to ineffective steel policies under the current economic conditions, the Federal Board of Revenue (FBR) has lost approximately Rs 17 billion in revenue generation as against the ship-breaking industry, which is the largest formalised industry of Balochistan, contributing Rs 12.6 billion in total tax contribution for the year 2014-2015.

Currently, in the first quarter of 2015-16, the pillar industry of Balochistan has only contributed Rs 400 million in taxes and revenue generation with a yearly outlook of only Rs 1 billion.

Horizon Ship Recycling owner Shoaib Sultan and Pakistan Ship-breakers Association (PSBA) executive committee member said that the ship breakers are continuously approaching the government to create a level playing field by increasing import duties and taxes on finished products so that the industry could survive, as it was virtually on the brink of shutdown.

"The sector created thousands of jobs and if prompt action would not be taken, then the government would lose at least Rs 11.6 billion from our industry alone," they added.

The Pakistan Steel Re-rolling Mills Association (PSRMA) has also approached FBR as the complete local steel sector is under strife. According to their statement, "Destruction of local industry through import of steel bar, angle, channel, girder beams (finished products) must be stopped."

The association further noted that the government collects more than Rs 30 billion revenue from the industry and has a steel re-rolling capacity of more than 6 million tonnes is shutting down.

The association has recommended that regulatory duty on finished steel products must be increased to at least 30% and sales tax must be enhanced to 30% from 17% on imported finished steel products in order to provide a level playing field, resulting in an increased revenue collection of Rs 22,000 per tonne on finished products.

As the international steel prices of finished products have crashed, all local steel sectors are feeling the pinch. In the month of October, 20,000 tonnes of finished products have arrived and if the trend persists, then FBR can easily mop up an additional 5.5 billion rupees in revenue generation.

Source: daily times. 11 November 2015

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