Senate panel wants to lower car prices
A Senate panel on Thursday linked the reduction in tariffs for cars up to 850cc to lower vehicle prices, as the government offered to cut taxes for two years to encourage the middle class to improve their standard of living .
The Federal Board of Revenue (FBR) presented the reduced fee structure to the Standing Senate Committee on Finance. The RBF documents showed that it is proposed to reduce the import tariff for locally produced fully disassembled parts from 46% to 30% and for non-local parts from 30% to 15%.
The reduction in tariffs for the automotive and pharmaceutical sectors should be linked to the reduction in the prices of cars and medicines, the standing committee recommended. He convened the Engineering Development Board (EDB) for a briefing on the pricing structure, quality and safety of assembled cars at the next meeting.
However, the relief will only be valid for two years or until June 2024, whichever occurs first, from the date of issue of the manufacturing certificate by the EDB.
The government is taking a hit of Rs15 billion on revenues because of the reduction in duties and taxes on cars. Taxes represent one third to 42% of the total price of vehicles, depending on the variant.
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The government also proposed to remove 7% additional customs duties on CKD kits and also recommended to remove 7% additional customs duties and 15% customs duties on fully built units (CBUs).
Senator Saleem Mandviwalla said that the most expensive cars are made in Pakistan, “you give duty free but there should be a pricing system”.
“There are still differences of opinion on the rationalization of the tariff structure for vehicles in categories above 850 cm3,” Syed Hamid Ali, member of the customs policy of the FBR, told the committee. Auto assemblers have played with the country’s fate for the past 30 years and have never kept their commitments regarding parts location, said Senator Mohsin Aziz of Pakistan Tehreek-e-Insaf (PTI).
The duty on Euro 5 quality fuel has also been reduced, the committee informed. The committee summoned the petroleum secretary for a briefing on the Euro 5 issue.
Senator Aziz argued that oil refineries have gained unwarranted advantages but have failed to modernize refineries.
The National Tariff Commission informed the committee about the reduction in duties and taxes of various industries, mainly textiles, chemicals, pharmaceuticals and tourism.
The government is gradually reducing import tariffs on raw materials and intermediate products to promote export-led growth, said National Tariff Commission chairperson Dr Rubina Athar. The maximum reduction was proposed for the two lowest tariff brackets, she added.
A major change was proposed for the textile sector, which received relief of 12 billion rupees, followed by 11 billion rupees for the chemical sectors. So far, over 2,000 tariff lines have been reduced to zero. Taxes on all raw materials have been drastically reduced, she added. Textile exports are expected to increase by $ 4 billion to $ 5 billion next year, Athar informed.
So far, over 2,000 tariff lines have been reduced to zero. Taxes on all raw materials have been drastically reduced, she added. Textile exports are expected to increase by $ 4 billion to $ 5 billion next year to reach $ 20 billion, she said.
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Duties on point-of-sale (POS) such as card readers and multi-function systems have been slashed from 5% to zero in the budget, the customs policy member of the RBF said.
Major relief has also been granted to the pharmaceutical sector on its 240 active pharmaceutical ingredients.
“If the pharmaceutical sector does not reduce drug prices, then the government should withdraw aid,” said Senator Talha Mehmood, chair of the standing committee.
For the publishing sector, customs duties on paper have been reduced from 20% to 16% and additional customs duties from 7% to 4%, said Hamid Ali.
Senator Farooq H Naik has shown his disappointment that all the relief for tourism has been given to the hilly areas; he said relief should also be given to the coastal areas of Balochistan and Sindh. Responding to Naik’s reservations, the RBF official said all of this relief was given on the recommendations of the provincial tourism authorities.
Posted in The Express Tribune, June 18h, 2021.