LAHORE - The Pakistan Steel Melters Association, in its budget proposals sent to the FBR, has suggested the govt to impose Panel Capacity Tax on sugar mills, as several millers have installed furnaces and start melting steel when sugarcane crushing season is off without paying any tax.
Around 10 sugar mills in Punjab have installed steel furnaces in their premises, with the melting capacity of 5 to 30 tons, causing over Rs3b loss to the national exchequer through tax evasion since their inception. “With a view to provide level-playing field to all sectors in the country, the sugar millers, who are producing steel in off crushing season, should also pay tax in line with the steel melting sector which is paying tax directly through electricity bills,” observed PSMA Chairman Mian Muhammad Saeed.
The chairman Mian Saeed, the ex-chairman Mian Azizur Rehman Chan, EC member Sheikh Nasim, EC member Iqbal Tariq and EC member Dr Ghulam Hussain suggested that sugar mills should sell their electricity to Wapda then purchase from it and pay tax on the patron of steel melters. The second option is the imposition of Panel Capacity Tax if the sugar mills produce their own power, they added.
The office-bearers of the PSMA demanded the level-playing field for all sectors within the country, as the Punjab industry gets gas supply only for two days a week while industry in Sindh and KP is enjoying gas supply allover the year.
Sheikh Nasim said that the business community was unable to understand that instead of taking measures to control line losses and enhance cheap power generation up to capacity, the policies are being evolved to add to the miseries.
He said that how the industry would remain competitive at such a high price of electricity which is one of the basic industrial raw materials.  “We already have the highest tariff in our region as in India, the electricity tariff for industry is 10.50 cents, in Bangladesh 10.75 cents and in Sri Lanka it is again 10.75 cent, leaving Pakistan totally uncompetitive and unviable in the international market place,” Sheikh Nasim stated.
The Mian Saeed said that due to massive increase in power tariff a total tilt has gone in favour of ship breakers resulting in closure of steel melting units. ST for reduction of 50pc given to 13 districts of KPK has made existence of furnaces impossible to survive. Furnaces operating in FATA are already creating great problems for our members and imposition of GST would give a massive advantage to furnaces in FATA.
He said the scrap sellers and dealers are not registered with the FBR. Steel melting industry was paying four per cent withholding tax of the scrap dealers.  Due to high prices of imported  scrap, the industry depends on local dealers to meet 35 to 40pc of scrap need. The PSMA head sought cup in withholding tax to 1pc as this step would be helpful for the industry. Besides, the govt is collecting one per cent turnover tax, which was previously a half percent.
The federal government pushed up the turnover tax in the budget for the ongoing fiscal year. Now, the industry demands the government to lower it down to 0.25 percent from current one percent.