Erstwhile FATA/PATA regions: Steel industry urges govt to withdraw proposal of abolishing FED

LAHORE: Steel industry stakeholders have urged the government to withdraw the proposal of abolishing Federal Excise Duty (FED) from erstwhile FATA/PATA regions as they claim the proposal is devastating and will cause revenue leakages of Rs 50 billion to 60 billion to the national exchequer.

“In contrast, this will also have adverse implications on the documented steel sector which is paying its entire amount of taxes and is already pressed to the wall,” said the stakeholders.

Erstwhile FATA/PATA regions have long been enjoying the constitutional protection in terms of taxes and duty exemptions. This further relief given to them in the finance budget 2021-2022 will cause the local steel industry to suffer huge losses thus pushing them to eventually close down and file bankruptcy, said members of the Pakistan Steel Melters Association (PSMA) in reaction to proposed budget 2021-22. They said two different revenue collection laws within a country is a clear discrimination. This regional disparity, in terms of tax exemption given to tribal areas, will negatively affect the taxpaying steel industry units. The non-tax paid goods from tribal areas are dumped into the taxable areas of the country which do not provide a level playing field within the steel sector, they alleged.

“On the broader aspect, this measure will negatively impact the overall economy. Closure of documented steel industry would cause losses of worth billions of rupees to the government. Unemployment rate will increase leaving several workers of the labor force jobless. This in turn will increase poverty, decrease GDP and would promote social unrest and conflict i.e. extremism is feared,” they claimed.

Before budget 2021-2022, erstwhile FATA/PATA regions were exempt of sales tax on steel scrap and all other raw materials. However, FED was imposed on finished products throughout Pakistan including these tribal areas. But in the new finance bill, FED (in sales tax mode) has been abolished which means that tribal areas are now tax free.—PR

Copyright Business Recorder, 2021