Cement dealers announce strike to protest high taxes

Say with hike in tax target, business opportunities are shrinking

LAHORE:

The association of cement dealers has announced that they are going on an immediate strike in protest against the increase in withholding tax.

“No cement dealer will pick up cement from any company from today (Saturday) onwards,” the association said.

“Tax target has been increased but business opportunities for traders and industrialists are being reduced. The higher the tax, the more the people look for avenues of tax evasion,” Association Chairman Sajid Chaudhry said on Saturday.

He added that one cement bag was available for Rs1,500 due to the harsh measures announced in the federal budget for fiscal year 2024-25, which had a significant negative impact on the overall cement distribution system.

In the recently enacted Finance Act 2024, the government has increased withholding tax, under Section 236H, from 1% to 2.5% for non-filers while turnover tax has been imposed on dealers and retailers.

“The impact of above taxes is huge and it cannot be mitigated from the rebates and discounts received from cement companies, neither can such an amount be earned from the market as cement falls under Schedule 3 of the Sales Tax Act,” he elaborated.

Also, the dealers and retailers are being pressurised to install Point of Sale machines on the plea that cement is a fast moving consumer good (FMCG), whereas “it does not fall within the definition of FMCG”.

“A majority of dealers and retailers are uneducated and incapable of maintaining record and operating Points of Sale, as required by the Federal Board of Revenue (FBR),” Chaudhry added.

He emphasised that dealers were not in a position to continue their businesses owing to such huge taxes and harassment by the FBR staff in relation to the installation of Points of Sale.

“Cement industry is the backbone of the national economy and its dealers and retailers play a very big part in the distribution of cement across the country,” he remarked.

The association urged the government to intervene in order to resolve the issue by implementing a presumptive tax regime; otherwise dealers and retailers would have no option but to close their businesses. It will result in increased unemployment, which will eventually affect the businesses of 50 allied industries and cause a huge revenue loss to the national economy.