Association of Builders and Developers demands that rate of taxes and prices of building materials should be reduced in order to provide support for development of construction sector
Karachi, April 30, 2015 (PPI-OT): Association of Builders and Developers of Pakistan has demanded that the rate of taxes and prices of building materials should reasonably be reduced in order to provide support to for the development of the construction sector. In an important press conference held at ABAD House on Thursday, this was stated by Chairman Junaid Ashraf Taloo, Vice Chairman Mohammad Hanif Memon, Chairman Southern Region Mohammad Hassan Bakshi and Convener Budget Sub-Committee.
They added that Federal Government should act upon the proposals of ABAD about reduction in taxes imposed on construction industry and building materials. A high rate on taxes and high prices of construction material shatters the dream of a common person for a house of his own. Chairman ABAD Junaid Ashraf Taloo said the increase in construction activities only would result in the revival of the national economy as over one hundred allied industries benefit from this.
Resultantly the government also receives sizeable revenue generated through construction activities. Over 120 million people are getting job opportunities directly or indirectly through the construction industry. Junaid Ashraf Taloo said ABAD is practically involved in the Prime Minister’s Vision 2025 for housing according to which 500,000 housing will be built annually.
The overall shortage of housing units has reached 8.8 million and in order to bridge this gap it is essential that incentives be offered including reduction in taxes. Chairman ABAD said last year the decrease in production cost should have resulted in decrease in prices of cement but regrettably, this did not happen. This relief was not passed on to the common people of Pakistan.
The Government has to take prompt and drastic steps to reduce construction cost. Vice Chairman ABAD Mohammad Hanif Memon said the Government has imposed 5% regulatory duty on steel billets, which has resulted in increase in prices of steel products including steel bars. It is pertinent that Government should abolish this regulatory duty or it should allow builders and construction companies to import steel products and steel bars without any regulatory duty.
He added that duties on construction machinery like should also be reduced and brought to 20% so that construction cost is reduced. New and used construction machinery includes tower cranes, batching plants, earthmoving machinery, forklifts, shovels etc.
Chairman Southern Region Mohammad Hassan Bakshi said that no taxes should be imposed on first time buyers. The total cost of any residential should be assessed and the relevant income tax should be charged in three annual installments and this should be considered as final liability. The turnover should be increased from five crores to 10 crores for taxation purpose. Stamp duties and registration fees should be reduced and brought to 1%, which will help in increasing of documentation, which will increase revenue generation for the Government.
The Government should also abolish charges on housing mortgage, stamp duty and registration fees etc. All banks and financial institutions should be given directives to provide loans on machinery used in construction on BMR basis. He added that in the upcoming budget, government should provide incentives on financing for construction of housing units. Mohammad Hassan Bakshi said in Sindh, including Karachi and Hyderabad a moratorium of gas connections is imposed since 2011.
The total consumption for these connections is less than one MMCFD, which makes it important that the ban on gas connections is lifted without any further delay. Saleem Kassim Patel, Convener ABAD Budget Sub-committee said revolutionary steps should be initiated in the Federal Budget to increase Housing Finance. In order to provide momentum to construction of low cost housing units, the finance should be made available on low markup.
In addition to this Government should also provide compensation for construction of low cost housing. He added that ratio of mortgage finance to GDP is lowest in Pakistan which is just 0.66 percent. The Federal Finance Minister has already announced the formation of a Housing Mortgage Re-finance Company. It is essential that Federal Budget should include further incentives for this purpose.
The loan taken by individual allottees for paying installments should be considered as expenses in their accounts. The financial institutions should be encouraged to issue loans on a markup, which is less than the market rates. Steps should be taken to increase the Mortgage to GDP ratio to 5%. It should be made mandatory for commercial banks and financial institutions to reserve a minimum of 5% of their portfolio for housing finance.
For more information, contact:
S. Javed Jafri
Secretary General – ABAD
Association of Builders and Developers of Pakistan
ABAD House, ST-1/D, Block-16, Gulistan-e-Jauhar
Karachi – 75290
UAN: 111-11-ABAD (2223)
Tel: +92-21-34613645-47, +92-21-34613649
E-Mail: firstname.lastname@example.org – email@example.com
Category: General Business News