Cement dealers across Pakistan have initiated a nationwide strike in response to the higher withholding tax imposed on cement in the federal budget for 2024-25. The strike, which began today, reflects growing discontent within the industry over the new fiscal measures.
The government has raised the withholding tax to 2.5 percent for non-filers under Section 236H of the Finance Act 2024. This increase, along with new turnover taxes on dealers and retailers, has rendered the cement business unsustainable in the current market conditions.
Sajid Chaudhry, Chairman of the Cement Dealers Association, voiced significant concerns, noting that these measures have driven cement prices up to Rs. 1,500 per bag, severely disrupting the distribution system. He specifically criticized the requirement for Point of Sale (POS) machines, arguing that such demands are impractical for many dealers and retailers who lack the necessary resources and education.
“The current fiscal policies have inflated costs and burdened the distribution network,” Chaudhry stated. “The requirement for POS machines is unfeasible for many in our sector.”
The association has called on the government to intervene and consider implementing a presumptive tax regime as a potential solution. They warned that without appropriate adjustments, many businesses might be forced to shut down, exacerbating unemployment and damaging the broader economy.
The federal budget for 2024-25 has also increased the Federal Excise Duty (FED) on cement to Rs. 4 per kilogram, up from Rs. 2 in the previous fiscal year. Initially, the budget proposed an increase to Rs. 3 per kilogram; however, Finance Minister Muhammad Aurangzeb announced a further increase to Rs. 4 per kilogram on Friday.
The cement dealers’ strike underscores the urgent need for dialogue between industry stakeholders and the government to address these pressing issues and find a balanced approach that supports both fiscal policy and economic sustainability.