Cement manufacturers unhappy with duty cut

Seek abolition of excise duty, initiation of mega projects.

LAHORE: Cement manufacturers, while praising the government for cutting the federal excise duty from Rs500 to Rs400 per ton in the budget, have stressed that the duty reduction should actually be Rs250 per ton according to the assurances given in this regard earlier.

The market had already factored in much higher relief, which brought down cement prices by Rs20 per bag this month, they say.

“We need the government’s initiatives, which could push up cement consumption and that is only possible if the federal excise duty is abolished as it is a punitive duty and curbs consumption,” remarked a spokesman for the All Pakistan Cement Manufacturers Association (APCMA).

In the budget for 2012-13, the government inserted Section 153A to the Income Tax Ordinance 2001, according to which, the manufacturers would collect 1% tax on gross sales price from their distributors/dealers/wholesalers. The proposal appears to be aimed at documentation of the economy as well as broadening of the tax base.

The spokesman, however, said this tax would disturb the cash flow of those distributors/dealers/wholesalers, who were already paying final tax on their commission income, and would also push up cement prices by Rs4 per bag.

In the budget, annual token tax on goods-carrying vehicles has been increased from Rs1 to Rs5 per kg. “The impact of this will be a rise of Rs1 per cement bag,” he said.

In addition to these, the spokesman said, average impact on the cement industry of the increase in power tariff on May 16 was Rs1.7 per kilowatt hour (kwh). The government also charged Rs1.97 per kwh as fuel price adjustment for April and the cumulative impact of these for the industry was Rs19 per bag.

Published in The Express Tribune, June 8^th, 2012.