Steel industry rejects three new taxes

The steel industry has rejected three new taxes--20 percent sales tax deduction, 3.5 percent income tax, and 1 percent excise duty on the sale of finished products to non-corporate sector--and demanded of the Federal Board of Revenue (FBR) review of its policy of overtaxing it, "simply to meet the revenue collection target".
Sources said a delegation of steel industry held a meeting with FBR chief Abdullah Yusuf on July 7, before his departure for Turkey, and strongly protested against the new taxes.
One member of the delegation told Business Recorder on Sunday that steel industry''s representatives conveyed to FBR chief in clear terms that 20 percent sales tax deduction and 3.5 percent income tax on sale of finished steel product for non-corporate sector were unacceptable as these taxes would not only add to the cost of the construction/housing industry, but would also make the steel sector on the whole a hostage to taxation.
The delegation members reminded Abdullah that the steel sector had accepted fixed sales tax of Rs 3800 besides Rs 617 duty in good faith to contribute to revenue and, after reaching the agreement unfolding of the new taxes, made no sense. They added that after huge fixed taxes steel sector can not accept other new taxes.
The list provided by the delegation to FBR chairman indicated that the steel sector as a whole was exposed to huge taxation in the budget.
The members said "You name any tax, it''s there in the list, with high percentage. It''s also negation of FBR''s own declared policy of simplifying taxes for the benefit of the payers".
If the taxes formula is accepted as it is, it will make the steel sector liable to 6 types of different taxes. These included Rs 3800 fixed sales tax on melting and Rs 617 income tax at melting stage, at finished stage, 20 percent sales tax deduction, 3.5 percent income tax for non-corporate sector, which itself is worse kind of discrimination, 1 percent excise duty and 1 percent withholding tax. It showed that taxes imposed at finished stage of steel products were none adjustable.
The way the steel sector has been taxed in the budget 2007-08 indicates that the government''s only concern is revenue collection, and nothing else. It also shows that the government did not feel shy to repeat the same tax for the same industry at different stages. Massive taxation of steel sector has developed a feeling of being cheated in the budget. The two sides are continuing dialogue to find out an amicable solution to the thorny issues of taxes and they are likely to meet again sometime this week.