ISLAMABAD: Pakistan’s steel industry has questioned the government’s economic approach/tax policies, warning that high taxation including increased rate of indirect taxes particularly sales tax has massively reduced demand of the steel products.
Pakistan Association of Large Steel Producers (PALSP) is facing mounting pressures. Reportedly, sales tax on steel was Rs. 10,300 per ton in 2019 which was jacked up to Rs 42,000 per ton in 2024 and in 2025 it is Rs 37,000 per ton. Officials warn this combination is stifling growth and weakening domestic producers.
While it may appear that the government is benefiting from this increased levy of sales tax, the reality is exactly opposite as the economy is being strained, and overall, the government is the net loser, as growth and economic activity are being stifled due to these mindless policies.
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The steel industry has also warned that hundreds of billion of rupees are being doled out annually in capacity payments to IPPs while domestic producers are strangled by high energy cost & killingly high taxation. This has resulted in massive demand destruction ultimately resulting in around 50% revenue loss to the government during the last three years.
In a recently released report pointed out that Pakistan’s steel sector currently consumes 3 billion units of electricity, with potential capacity of reaching 7 billion units. Utilizing an additional 4 billion units could save the government roughly Rs. 68 billion in capacity payments to independent power producers (IPPs), currently priced at Rs. 17.06 per unit. Power is the second major raw material in steel making.
Copyright Business Recorder, 2025
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