ECC imposes more taxes on car imports


The government on Wednesday approved the payment of 50 billion rupees to partially settle the contributions of Chinese power producers and authorized the imposition of a regulatory duty of up to 50% on all types of imported vehicles, leaving the consumers at the mercy of local assemblers.

The Economic Coordination Committee (ECC) of the cabinet which made these decisions also approved a subsidy of Rs40 billion for wealthy industrial consumers by subsidizing imported regasified liquefied natural gas (RLNG).

The Pakistani government of Tehreek-e-Insaf (PTI) taxes the poor and the middle class to subsidize the rich. In the mini-budget, he taxed 375 billion rupees in taxes but exempted real estate investment trusts from 15% income tax.

The ECC has approved the imposition of a 10% regulatory duty on the import of fully-built electric vehicle battery units (CBUs) over 50 KWH, excluding commercial buses and trucks.

Bowing to pressure from local auto assemblers, the government has started to discourage the use of electric vehicles while the rest of the world is doing the opposite. Last week, the government proposed to impose a 17% sales tax on electric vehicles.

The ECC has also approved an increase in regulatory duties from 15% to 50% on the importation of all types of hybrid vehicles in CBU condition with a cylinder capacity greater than 1,500 cc but not more than 1,800 cc.

There is a 233% increase in regulatory duty rates. All other taxes are added to this.

The ECC has approved an increase in regulatory duties from 15% to 50% on the importation of vehicles having a spark / compression ignition engine (conventional engines) in CBU condition exceeding a displacement of 850 cc but not more than 1,800 CC.

The government said regulatory fees had been imposed to control the import bill, which rose in part because of the importation of cars. The country imported 26,000 cars in the first five and a half months of the current fiscal year.

However, the decision to raise taxes will undo the relief granted by Prime Minister Imran Khan to the automotive sector in June 2021.

These measures will leave people at the mercy of local auto assemblers, who are already giving consumers six to eight months delivery time and making it easier to impose a steep premium, known as clean money, on delivery. anticipated cars.

Clean money was the difference between demand and supply of cars and the supply would not increase despite the imposition of taxes, said PML-N Senator Musaddiq Malik.

In one year, the FBR collected Rs 730million in taxes on its own money and now rates have doubled after selling cars with its own money could not be discouraged despite imposing taxes at the stage. recording, said RBF chairman Dr Mohammad Ashfaq.

The Commerce Department had opposed imposing taxes on electric vehicles, but the Department of Industry, which protected car assemblers from consumers, advocated discouraging imports of electric cars.

The Commerce Secretary told a rally last month that increasing taxes on electric vehicles could jeopardize Pakistan’s relations with the European Union and the United States. In the budget some incentives were given for importing electric vehicles in CBU condition and reversing that policy at this point was not a viable political intervention, the Commerce Secretary told the Tariff Policy Board.

Through the mini-budget, the government also proposed to significantly increase the federal excise tax on locally produced and imported cars. On imported cars with 1,001 to 1,799 cc engines, the federal excise tax was doubled from 5% to 10%, on 1,800 to 3,000 cc engines, the rate was increased from 25% to 30% and for engines with a capacity of 3,001 cc and above it has been increased from 30% to 40%.

Likewise, the DEF has been increased on local cars with engines from 1,001 to 2,000 cc from 2.5% to 5% and for engines with displacement of 2,001 cc and above it has been increased by 5%. % to 10%.

The ECC on Wednesday approved the imposition of a 10% regulatory duty on polypropylene textile materials to remedy a tariff anomaly at the industry’s request and authorized the removal of the 5% regulatory duty on polypropylene textiles. varnishes used in the manufacture of furniture. The ECC imposed a 20% regulatory duty instead of an anti-dumping duty on the import of sodium carbonate for a period of six months.

Chinese payments

The ECC approved an additional budget of 50 billion rupees to partially pay the contributions of the Chinese independent power producers (IPPs) set up under the China-Pakistan economic corridor. The total outstanding amount exceeds Rs 250 billion, which the government has failed to address due to the deteriorating financial health of the power sector.

Under the 2015 Energy Framework Agreement, Pakistan is contractually obligated to make timely payments to Chinese power plants that have been set up under the CPEC. However, the Pakistani government has been violating this agreement since 2018, when Chinese power plants started generating electricity.

To date, 10 energy projects worth $ 10 billion have been completed and four projects worth $ 4.7 billion are under implementation.

About four months ago, Pakistan again assured China to pay contributions worth $ 1.4 billion or Rs.250 billion to Chinese power plants. He also pledged to open a working capital that would have deposits equivalent to 21% of the cost of electricity production. On average, around Rs 5-6 billion each month is paid less to Chinese power producers compared to the amount billed, a finance ministry official said.

Urea import

The ECC has authorized the immediate import of 50,000 tonnes of government-to-government urea from China, subject to the approval of the Pakistan Standards and Quality Control Authority. TCP was also responsible for negotiating the price with the Chinese supplier authorized by the Chinese government for further urea imports.

Farmers face a shortage of urea, but the government has so far remained in denial.

Posted in The Express Tribune, January 6e, 2022.

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