KARACHI, June 11: People seeking to buy property would be the ultimate sufferers as burden of tax on builders and developers would be passed on to them by jacking the prices of plots and flats and houses up.
The proposal for a Rs100 per square yard tax on developed plots and Rs50 per square feet tax on constructed property would hurt property buyers.
Nothing would go from the pocket of builders and developers as they would net this amount from end users for onward payment to the exchequer.
Association of Builders and Developers Chairman Babar Mirza Chughtai said that builders were not worried over new taxes and duties, but they feel that consumers, who intend to make some small and medium sized property, would have to face the music. “There is no problem for people who make their livings in posh areas and they are hardly bothered about any new levy because they can afford it,” he said.
If a consumer tries to make a house on 120 yards, he would have to bear extra Rs12,000 as the builder would recover it from them as Rs100 per square yards on developed plots, he said.
Frankly speaking, all taxes and duties imposed on manufacturing, trading, importing, etc., are recovered from consumers only and the new tax on property builders is the exact replica of the same stereotype practice in the country to fill up the mouth of the national treasure by ruining the masses, Babar said.
He said there is virtually no tax imposed by the Dubai government in the current on-going projects under a construction boom.
To rub salt on the wounds of builders, a total of Rs150 per ton has been increased in terms of federal excise duty (FED) on cement manufacturing which would push up rates of cement. Besides, sales tax has been increased by one per cent on various items followed by some taxes on ceramic industries.
These new taxation measures on the basic construction material would increase the project cost, thus affecting directly the consumers as builders would already recover at the time of project booking, he said.
Babar said on the one hand the government talks about giving low-cost housing, and on the other side it was virtually making the dream of a common man to own a house a daunting task, he said.
Cement contributes 30 to 40 per cent of the total construction cost.
“I think the cost of any construction project will rise by at least 25 per cent after imposition of FED on cement, some duties on ceramic and increase in sales tax on various items,” ABAD chief said.
The government is taxing those industries which are labour intensive (skilled and unskilled) while those trades and business which provide low job opportunities are being given incentives, he said.
General Manager, Attock Cement, Irfan Amanullah, said that cement prices would go up by Rs10 per 50 kg bag after one per cent increase in sales tax and rise in federal excise duty to Rs900 per ton from Rs750 per ton.
He said clever dealers and retailers, after smelling a change in the budget, resort to huge piling up of stocks. They have already enhanced the rate of cement ahead of the budget and now they would further increase the rate by Rs10 per 50 kg bag, thus putting the onus on manufacturers.
He said the government would now collect Rs22 billion in terms of FED from the cement industry as compared to Rs18 billion after increase of Rs150 per ton.
