New taxes spike construction costs
The government has also introduced a new definition of tax fraud, which now includes the intentional evasion of legally due tax or obtaining an undue refund by submitting false documents, false returns, or withholding correct information. photo: REUTERS
The prices of all building materials, including cement, steel and bricks have reached record levels in the open market in the Rawalpindi district due to the imposition of new taxes, hitting the construction industry hard.
The estimated cost of building a five-marla house has increased by Rs700,000 to Rs1 million and the estimated costs of all government projects have also increased significantly.
Additional funds have been requested for all ongoing development schemes according to the new rates.
Contractors for all small and large government mega projects have immediately stopped construction work and have demanded an immediate increase in funds from the administration.
The district administration has decided to send files to the government to create PC-1 with new estimated costs for all ongoing development schemes and projects across the district.
According to the new taxes effective from July 2, the price of a cement bag has increased from Rs1,290 to Rs1,450, steel has gone up from Rs262,000 per tonne to Rs275,000 per tonne, the rate of good quality bricks has increased from Rs13,000 to Rs16,000, and in some cases, Rs17,000 per thousand.
Similarly, the rate of sand has risen from Rs25,500 to Rs30,000 per trolley, gravel from Rs27,000 to Rs32,000 per trolley, and the cost of a house door, window and frame has jumped from Rs10,000-Rs13,000 to Rs15,000-Rs18,000.
The price of a set of plumbing materials meant for one bathroom has hiked from Rs80,000 to Rs150,000.
The masons labour cost is now Rs2,500 while the labourer's daily wage is Rs1,700.
There has been a record 40% increase in the rates for plastering walls and ceilings, ceiling work, and shuttering.
The tile rate has also been increased by about 30%.
Chaudhry Raheel, the secretary of the Brick Kiln Union says the brick kiln industry is already devastated by zigzag technology and fines tickets and now, the influx of new taxes has put the final nail in the coffin.
The brick kiln business will reduce by 40% in the next two to three months, he fears.
Building contractor Haji Nawaz says due to an increase in the prices of all types of building materials, the estimated cost of a new five-marla house will increase by Rs1m to Rs1.5m.
The destruction of the building industry will affect all industries and businesses as 50% of the industry's business is linked to the building industry, he adds.