Govt raises imported vehicle taxes up to 500%, causing hike prices.
Due to Govt increased taxes implementation of customs charges, additional customs duties, sales taxes, additional sales tax, federal excise duty, and income tax at rates that are significantly higher than those imposed on the import of parts for locally manufactured vehicles, according to the PAC, provides protection.
Special Secretary of Commerce Mujtaba Memon claimed that local manufacturers receive 241% to 500% protection.
“The protection level was in the region of 100% to 390% before the current application of additional tariffs,” he stated.
The PAC, led by Noor Alam Khan, came to the conclusion that regional automakers broke their promises, overcharged customers by making them pay a price that was not agreed upon at the time of booking, and delayed delivery for more than a year.
The PAC gave the Ministry of Industries and the Ministry of Commerce the go-ahead to study the protection and create a strategy that addresses the current problems within a month.
Tariff Policy
“Any modification in the tariff policy at this stage may enrage the major manufacturers,” said Imdadullah Bosal, secretary of industries. “However, government to establish a policy within a month to halt the exploitation of consumers.”
When full payment made, the PAC asked the companies to deliver the vehicles within a month. Additionally, it suggested cutting the whole delivery time down to one month, with the corporation paying late delivery fees if the vehicle was not given.
Company cannot accept more than 20% in advance, and the delivery must made within two months, according to Bosal. The corporation must pay a fee equal to the Karachi Interbank Offered Rate (Kibor) + 3% if the delay lasts longer than two months. Between November 2021 and April 2022, the corporations paid fines on this account totaling Rs. 1.9 billion.
PAC recommended that the government decrease taxes on imported vehicles with 800cc to 1,300cc engines in order to promote competition if the companies do not shorten the delivery time.
Senator Mohsin Aziz of the Pakistan Tehreek-i-Insaf (PTI)stated that the amount of imports allowed should be less than the capacity of regional automakers to produce vehicles.
“Against the overall manufacturing capability of 506,000 units a year, these enterprises cumulatively assembled 330,000 units in the previous fiscal year,” the secretary of industry responded.
According to Bosal
Industries Ministry is working on a plan to restrict businesses from ordering vehicles with delivery times longer than two to three months. Instead, wholesale dealers should used to purchase the vehicles, not automakers.
“PAC to suggest opening imports if the corporations don’t start acting properly,”.
Lawmakers also questioned automakers and govt ministries over their collection of Bn of Rs advances for unfulfilled orders.
According to the Secretary of Industries
Indus Motors had received Rs. 112 bn in advances at the end of the previous fiscal year, Honda Atlas had received Rs. 23 bn, and Pak Suzuki Motors received Rs. 41.7 bn.
