LAHORE - The cement prices will go up by at least Rs15 per 50kg bag in the country, as the government has proposed to increase Federal Excise Duty (FED) by 25 percent on cement to Rs1.25/kg or Rs1,250/ton.

Industry sources said that the net impact on manufacturers’ cost will not be Rs12.5/bag, rather it would be around Rs15/bag as sales tax is levied on top of FED. They said the increase in FED is second consecutive times, as the government had increased the cement price by Re1 per kilogramme in the last federal budget of 2016-17, affecting the common man who had humbles resources for house building. The industry had suggested in its budget proposal that the Federal Board of Revenue (FBR) should phase out the Federal Excise Duty (FED) to encourage cement off take. It said the cement industry was subject to FED at the rate of 5 percent of retail price and General Sales Tax at the rate of 17 percent of maximum retail price. These taxes account for about Rs100 per bag.

The industry stakeholders regretted that government planners were not checking unregulated import of Iranian cement into the country on under invoiced prices. Due to this menace, it said, Pakistan’s share of exports to Afghanistan reduced. Due to the high cost of doing business, the cement industry was losing competitiveness to regional countries such as Iran, United Arab Emirates and India. In these circumstances the cement sector and the consumer would bear the price hike, which was detrimental to lowering the usage of the product. Reduction in the energy costs, removal of the GIDC on gas, abolition of the customs duty on coal and additional incentive of five percent on export of cement by sea would be elixir of industry.

The abolition of the excise duty not only eliminates tax evasion but also enhances cement consumption at reduced price, the industry stakeholders said. They said the government should impose 20 percent regulatory duty on import of cement in addition to Customs Duty to protect the local industry. They said this increase would increase cost of projects under the China Pakistan Economic Corridor to some extent. The increase in per kilogramme price is detrimental to local manufacturers, they said.