Experts call for fair turnover tax policies for steel sector
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Tax experts and representatives of the steel industry have stressed the need to end discrimination in turnover tax levies across industries. They argue for the rationalisation of turnover tax rates and an extension of the adjustment period to 10 years or more. These demands arose during a public-private dialogue organised by the Sustainable Development Policy Institute in collaboration with the Pakistan Association of Large Steel Producers, focusing on the impact of taxation policies on the steel sector, particularly the disparity in turnover tax rates.
“The current turnover tax regime exhibits regressive and discriminatory characteristics, reflecting an unfair policy approach by policymakers,” stated participants. They pointed out the necessity of such reforms for fostering a conducive business environment and promoting equitable growth across industries. Contrary to perception, the International Monetary Fund opposes turnover tax levies, highlighting an ad-hoc approach in tax collection.
“For some industries, the turnover tax rate is 0.5%, while for others, including the steel sector, it reaches as high as 1.25%, reflecting discriminatory treatment,” noted experts. They highlighted the severe financial strain facing the local steel industry, attributing it to increased capital requirements due to PKR devaluation, high interest rates, rising energy prices, and steel smuggling from Iran. These factors have led to significant losses, necessitating relief measures instead of further burdening the industry with regressive turnover taxes.
Published in The Express Tribune, May 22nd, 2024.
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