Flat steel products: only 2.5 percent sales tax to be withdrawn

The government may withdraw only 2.5 percent sales tax from flat steel products and bring the duty down to 17.5 percent from 20 percent which was announced in the budget 2007-08.
Sources said that there was a series of meeting held between the representatives of steel sector and Chairman Central Board of Revenue (CBR) Abdullah Yousuf during last two days on the issue.
Earlier, it was expected that the government would withdraw 5 percent sales tax across the board on all items to bring down the prices. A source in the industry said that 17.5 percent sales tax on flat steel products would not help the government reduce steel products price. He said that the government was already taking too much time in issuing SRO on withdrawal of sale tax and zero rate import duty on scrap.
As a result, he said that all the business activities were standstill since June 9, the day when budget was announced that also unveiled an increase of 5 percent sales tax on steel products across the board. This led to an upsurge in steel products creating confusion about whether the duty would be withdrawn.
The industry wanted the government to clear the prevailing confusion in the industry saying that even Pakistan Steel Mills products were not cleared. The CBR on the other hand says that the industry had never passed on the benefit of the incentives receiving from the government to consumers.
There seems to be complete lack of coordination among the government departments as the Ministry of Industries did not own the duty increase and convened a meeting of all stakeholders in the wake of hike in steel prices.
The Ministry of Industries was apprised by the industry representatives that the budgetary measures if not withdrawn could lead to further escalation in steel prices. A number of meetings between the industry and the CBR were held last week giving a message that the government has decided to withdraw 5 percent sales tax and import duty on scrap.
All the stakeholders firmly believe that as soon as the SRO on withdrawal of sales tax and zero-rate import duty is issued the prices of steel products would reduce substantially. During the meetings of the EDB and CBR, some of the participants were of the view that there should be a level playing field for all sub-sectors with fixed sales tax at input level.