Taxes on bricks, steel threaten housing affordability

Maahmud Islam, a private employee, plans to build his tin-shed house. However, he is worried about the rising costs of building materials due to the increased taxes on various construction products, including bricks and steel, in the new FY25 budget proposed on Thursday.

"If the government increases taxes by Tk 1, suppliers raise the prices of construction products tenfold. How can ordinary people survive?" he asked with concern.

Additionally, according to budget documents, property registration tax has been set for apartments, flats, or floor spaces built for residential and commercial purposes, as well as the adjacent land, based on per square meter.

Industry experts warn that this will increase the burden on ordinary people.

Mohammad Nizam Uddin Jitu, chairman of the FBCCI Standing Committee on Real Estate and Housing, said, “The property registration tax will drive up flat prices. Many will be discouraged from registering their properties, ultimately shifting the burden to the customers.”

Real Estate and Housing Association of Bangladesh (REHAB) Vice President Mohammed Akter Biswas said, “The steps taken in the new budget may cause temporary problems but will bring good results in the future. However, there are some aspects to consider.”

“Approximately 300 products are used in our construction sector, most of which are imported. Increasing taxes on these products will ultimately be passed on to consumers, which is detrimental to our sector,” he added.

Higher taxes on bricks

To promote sustainable infrastructure, steps are being taken to develop alternative bricks to replace burnt bricks, conserve agricultural land, and produce environment-friendly construction materials.

In the FY25 budget, the government proposed to increase the specific tax for non-machine-made normal bricks (non-refractory building bricks), except bricks used in facing, from the existing Tk 450 (per thousand) to Tk 500 (per thousand).

For machine-made or mechanically manufactured normal bricks (non-refractory building bricks), except bricks used in facing, from the existing Tk 500 (per thousand) to Tk 600 (per thousand).

For machine-made or mechanically manufactured bricks Grade I (with three holes, ten holes, seventeen holes and multi-cored bricks) from the existing Tk 700 (per thousand) to Tk 800 (per thousand).

For machine-made or mechanically manufactured bricks Grade II (with three holes, ten holes, seventeen holes) from the existing Tk 700 (per thousand) to Tk 800 (per thousand).

For brick chips, the new budget proposed an increase from the existing Tk 700 (per 100 CFT) to Tk 800 (per 100 CFT), and for Micad Bats from the existing Tk 500 (per 100 CFT) to Tk 600 (per 100 CFT).

The government also collects tax for the grant or renewal of licences for brick manufacturers.

According to budget documents, providing rates and manner for the collection of tax specified in the schedule in respect of the grant or renewal of a license by any person responsible for the grant or renewal of a license of the manufacturer of bricks according to Brick Manufacturing and Brick Kiln Establishment (control) Act, 2013.

Increased tariffs on steel

At present, various types of superior quality iron and non-alloy steel wire are being produced in the country, which, if utilised, will reduce the pressure on foreign exchange. As a result, imports can be discouraged by increasing the tariff at the import stage of such products, which in turn can help further develop the domestic industry.

In view of the above circumstances, the government recommended increasing the import duty of LRPC Wire (low relaxation pre-stressed concrete steel strands) from 10 per cent to 15 per cent.

In this regard, Mohammad Nizam Uddin Jitu said, “We expected the duty to come down, but it has been increased on some other products, including bricks and steel. We will discuss this issue in our meeting and send our proposals soon.”

“The housing sector has been stalled for a long time. The measures in the new budget have gone against traders in our sector. As a result, this sector will come to a complete standstill. Small traders will suffer more,” he added.