Higher tax rates force Pakistani cement dealers to go on strike

Higher tax rates force Pakistani cement dealers to go on strike

By: Communicators - Business Team (July 15, 2024)

Cement dealers across Pakistan have initiated a nationwide strike in response to the government's decision to increase the withholding tax to 2.5 percent for non-filers under Section 236H of the Finance Act 2024. This new tax rate, along with recently imposed turnover taxes on dealers and retailers, has created significant financial strain, making it challenging for cement dealers to maintain sustainable operations under the current market conditions. The strike reflects the industry's urgent call for a reassessment of these fiscal measures to alleviate the burden on businesses.

Cement dealers have raised significant concerns about the impact of higher taxes on the cement industry in Pakistan, noting that these measures have driven cement prices up to Rs. 1,500 per bag and disrupted the distribution system. They have criticized the mandate for Point of Sale machines, pointing out that many dealers and retailers lack the resources and education to implement such technology. The association of dement dealers has called on the government to intervene, proposing a presumptive tax regime as a solution. They have warned that if these issues are not addressed, many businesses could be forced to close, leading to increased unemployment and economic harm.

The recent budget for 2024-25, with the increased FED on cement to Rs. 4 per kg, will likely exacerbate the concerns of the cement dealers, who are already on strike due to higher taxes and other challenges. The doubling of the rate from the initially proposed Rs. 3 per kg to Rs. 4 per kg could further inflate cement prices and impact the industry’s profitability and distribution system.