October 22, 2020

Cement Distributors Go On Strike Over New Taxation Policy

The Chairman of the Cement Distributors Association, Muhammad Munir Chaudhry said in an association gathering on July 1, 2019, in FPCCI Cantt, that,” the recent taxation policy of the government is simply out of our understanding”. He further added that even the cement manufacturing companies could not understand on how to get this method executed. He said that he met with FBR head Shabbar Zaidi and tried to explain this to him, but his recommendations were turned down.

He said that the FBR is trying to make the retail sellers, the government’s tax withholding agents. He added that “The government expects, mostly illiterate retailers, to charge distributors their taxes, this is simply not possible because the retailers do not possess the know-how of taxation documentation”. The Chairman said that he requested Shabbar Zaidi to charge them a fixed tax on the spot, but he rejected the request.

An official added that “The government wanted them to supply cement to only those retailers who are tax filers”. On this condition of the government, the officials said that it was not possible for them to check every retailer’s filer/non-filer status.

Chairman further added that “The income tax authorities have assumed that the cement dealer’s profit per bag is 10%”. Commenting on that, he said that, “We have never seen this kind of profits, we barely make a profit of Rs5 to Rs4 per bag and if a bag is priced at Rs600 and the government taxes us according to 10% profit, how can we give taxes if we simply don’t make that much profit”. He said that it was impossible to do business under the current situation.

He urged that this was the duty of the companies to set a ratio of profits for the wholesale dealers and then the government should tax them accordingly.

He added that the police officials were inspecting different shops of distributors and were investigating where the distributors were getting their cement from and on what price were they buying and selling it. He said that if our account books do not match with the books of our suppliers or retailers, then we will have to face the police and taxation officials on daily basis and we simply can’t afford to do so and the government is headed directly towards this phase. He said that “An illiterate retailer simply cannot maintain his books according to FBR standards and neither can he handle sophisticated taxation documents and hence, the government’s taxation strategy is not going to work”.

Furthermore he said that, “This is not a strike, we are simply asking the companies and the government to come up with a complete and thorough process on what our profits are going to be, what cement rates are going to be and we want them to come up with a new strategy or simply maintain the previous system of taxation”.

Officials said that “We will not dispatch even one bag of cement unless and until we don’t get a thorough framework of taxation procedure”. They said, “It is not that we do not want to be taxed if the government wants higher taxes than we are ready, but then charge us fixed taxes on the spot”. He further said that we simply do not have the amount of money that the income tax authorities think we have right now. Hence, we cannot pay taxes by the method proposed by the government.

They said that “We will remain on strike until the government and the companies don’t decide our profits and come up with a taxation system that is acceptable to all because doing business under these conditions is simply not possible”.

A member of the association from Gujranwala, even suggested the association Chairman that, “The association should hold countrywide protests along with the retailers”. We believe that under these conditions, it’s highly possible that the association members may come on the streets to protest.

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