Budget 2024 to support construction industry
In a bid to revitalise the currently struggling construction sector for survival, the Finance Ministry is planning to propose catalytic inputs including easing taxation on building materials from the upcoming budget 2024 to be presented in November.
13 far-reaching proposals aimed at increasing the construction industry’s GDP contribution to the economy by providing emergency relief have been submitted to President Ranil Wickremesinghe, Urban Development and Housing Ministry Secretary W.S. Sathyananda disclosed.
20 per cent of the country’s population livelihood depends on the construction industry and it is essential to prevent the total collapse of this sector from the present set back, he added.
The Finance Ministry will consider these proposals including the pre-budget submissions of the construction sector stakeholders during the budgetary meeting with the high officials of the ministry to devise budget proposals, senior official of the ministry said.
He added that most probably the easing of taxation on building materials specially cement and steel imports will be considered as the committee on public finance (COPF) has already informed the Finance Ministry that there has been unusual increases in prices and shortages of construction materials in the local market.
The proposal of the leading contractors relating to the introduction of a mechanism to use the actual current market prices of construction material while calculating the price variation for reimbursing contractors engaged in public projects is also under consideration, he divulged.
Spiralling prices of building materials specially cement and steel in recent times have stalled the building work resulting in a 23.1 per cent contraction in the construction sector causing a loss of 75 per cent of around a 1 million work force, industry stakeholders complained.
Sri Lanka’s building construction work has had a steep fall of 23.1 per cent in the second quarter of 2023 against the same quarter last year, Census and Statistics Department confirmed this week.
The price of a 50 kg bag of cement is being sold at the local market at an exorbitant price of Rs.2150 when it can be sold at a price of Rs.1850, a Trade Ministry report revealed.
Cement companies are earning an undue profit after tax of Rs 300400 in selling a 50 kg bag of cement, a senior member of COPF said.
According to the Trade Ministry report presented to COPF a metric ton of steel QT Bars could be sold at a price of Rs. 290,000 including taxes of Rs.49,000 and dealers margin.
But the local market price is Rs. 360,000 and therefore the companies are earning a massive profit of Rs 70,000 per mt, the COPF source pointed out adding that this price could be reduced by lowering taxes.
According to the Trade Ministry report presented to COPF a metric ton of steel QT Bars could be sold at a price of Rs. 290,000 including taxes of Rs.49,000 and dealers margin.