Tax relief given to the construction industry in federal budget 2015-16 will not scale down the prices of residential units, said Junaid Taloo, Chairman Association of Builders and Developers of Pakistan (ABAD), here on Wednesday. "Although the government has recognised construction industry and provided a relief in turnover tax for three years; sales tax exemption on sand and bricks, the impact of the same is quite nominal, which will not reduce the cost of residential units," he stated while talking to media at a press conference held at ABAD house here.
He said that the government in order to make residential units affordable for middle and low-middle income groups should have reduced import duty to 10 per cent from 20 per cent on machinery imports. Moreover, he said that the government had to provide a major relief for broadening of tax base and ABAD for the purpose had proposed to allow steel imports with the exemption of Regulatory Duty (RD).
Junaid said that Federal Excise Duty (FED) should also be exempted on cement and the government must collect sales tax from cement on ex-factory rate. He said that ABAD had strongly advocated the rationalisation of Mortgage Housing Finance (MHF) at all relevant forums ie federal government, SBP, etc as if the MHF was rationalised, the construction industry would be able to enhance its capacity, which was presently hovering around 0.35 million houses against the shortage of over 8 million houses.
He further said that the government was presently generating Rs 3 billion through the MHF and if the same was fixed at reasonable level, the government could collect Rs 6-7 billion from it. He opined that the aforesaid proposals would not only improve revenue collection but also help common man to regain their buying power. "Although water scarcity is provincial subject, the federal government should look into the matter besides allowing new gas connections to facilitate the construction industry in general and citizens in particular," chairman ABAD said.
He also demanded the authority concerned to initiate the construction of M-9 motorway from Karachi instead of Hyderabad or Sukkur as Karachi was the financial hub of the country and contributed 60 per cent of total revenue. He termed the inclusion of builders and developers in service sector by Sindh Revenue Board (SRB) as unjustified, saying that ABAD members were not service providers and requested the Sindh government to omit them from the ambit of tax on services in provincial budget 2015-16. He said the Sindh government, which had fixed a target of Rs 6.5 billion from stamp duty, was unable to achieve it, due to high tariff and urged to slash the stamp duty to 3-4 per cent from 7.5 or 9 per cent to increase its collection to Rs 13 billion approximately.
He also expressed concerns over exorbitant increase in KMC tariff, saying that KMC, which should have raised its tariff by 10 per cent in three years, had escalated the tariff by 400 per cent to meet its financial crunch, which he termed as unwarranted. Vice chairman Southern Region Hassan Bakshi, former senior vice chairman Saleem Kassim Patel, Zaigham Rizvi and others were also present at the press conference.