Former Chairman of Pakistan Steel Melters Association, Mian Iqbal Tariq has urged Prime Minister Imran Khan to continue levies of 17% FED on Steel Mills of FATA-PATA to give level playing field to all stakeholders. The FATA-PATA based steel units have enjoyed Sales Tax and Custom concessions for the last 50 years, and now these units have gone well established.
Conservative estimate of an average size steel unit in FATA/PATA, which manufactures at least 100 tons a day, at the going Sale Price of Rs 100,000/ton, can save over Rs 600 million yearly just in Sales Tax/FED alone. This leaves all other units in the settled areas uncompetitive. With about 30-40 steel manufacturing units operational in these areas, the combined loss to the exchequer stands at about Rs 20-25 billion annually just from the steel sector at the moment. It is noteworthy that many more units are in the process of being set up.
The government has already announced a very generous package of Rs 100 billion annually for the development of the tribal areas, and that should suffice to stabilize the economy of that region and maintain and generate employment.
It is also important to mention here that these units from FATA/PATA sell most of their production into settled areas, and not the formerly tribal areas. The combined production capacity of these steel units of the tribal areas far outweighs the demand in that region.
The time has come that they should contribute to the national economy of the country and pay their share of taxes. Any relief of taxes to steel units of FATA-PATA will be at the cost of the steel units in the rest of the country. Such unfair relief has already led to a massive unbalance in the steel industry against the settled areas and will leave them with no other option but to close down. Many steel units in Punjab have already been forced to shut down their businesses due to unfair price-cutting they have faced from the steel units from the FATA/PATA areas, and many are on the verge of shutdown. If this relief and trend continues, rough estimates indicate that in the next 2 years the loss to the exchequer could swell to the tune of Rs 60 billion, and at least 30,000 people left unemployed.
At a time when the push for the government is to bring everyone in to the tax net, this goes against that spirit, especially when they have been rewarded at the expense of the rest of the country for the last 50 years already.-PR