Cars importers have suggested the government to allow commercial imports of used vehicles of up to 5 years to generate the maximum revenues to the national kitty while meeting the demands of public seeking automatic, fuel efficient and durable cars.
All Pakistan Motor Dealers Association (APDMA), an association which usually represents importers of Japanese cars, sent its proposals to Ministry of Finance for possible review of automobile imported policy in the upcoming budget for the year of 2017-18.
The association suggested the government for allowing commercial imports, in addition to existing schemes for the import of used vehicles like Transfer of Residence Scheme, Gift Scheme and Baggage Scheme, that would be in line with the Government’s policy of the documentation of the economy.
The commercial imports of cars with extended limit would also bring the import of used vehicles business into the tax net and will help the government expand its tax base. “We suggest that only the certified members of APMDA should be allowed to import the used vehicles on commercial basis for the sake of transparency of the trade”, the body said in its proposal.
The existing schemes for the import of used vehicles are for the facilitation of overseas Pakistanis. It is recommended that in these schemes there should be no restriction of age limit for the import of vehicle.
Reduction of Tax Rates On Reconditioned Imported Cars
It may be pertinent to point out that the Amnesty scheme of March 2013 of the last government had resulted in regularizing 52,000 smuggled vehicles of all engine capacities without restriction of age limit. Smuggling is done to avoid high rate of taxes and/or age restriction.
To avoid this resort to smuggling in future, the government should review the current policy and reduce the tax rate and increase the age limit of used cars. This will make smuggling less attractive and also increase the govt. revenues substantially.
The simplification of the import procedure of used vehicles of all engine capacities and the fixation of duty for all used vehicles would be in line with the good governance policy of the government, the proposal said.
“This would also help the government to enhance its tax base as well as the volume of revenue”, the importers said.
Accusation on Local Automobile Assemblers
APDMA in its budget proposal accused that the local assemblers are maintaining a cartelization due to consumers’ unfriendly benefits of restrictions on used vehicles import for the last many years.
There has been no increase in their production or any reduction in price. They continue to fleece common people in the shape of 100% advance payment at the time of booking of a car and the delivery of a car takes three months to six months.
As a result of delays in car delivery, the black marketers charge a hefty premium “own money” from purchases of cars. They increase the price of their cars as and when they desire, which results in greater financial burden for the common man and profits for the auto assemblers much higher than in our neighboring countries.
APDMA pointed out that the promised levels of deletions by local automakers have also not been achieved despite the passage of many years. It is also pointed out that in the present government’s tenure the exchange rate of Japanese yen depreciated almost 40% but the local assemblers have not given this benefit to the consumers in the shape of price reduction.
Introduction of Fixed Rate Duty on 1800 CC Cars/Jeeps
The government should impose a fixed rate of duty on the import of used vehicles of engine capacity of above 1800 CC as is the policy for used vehicles up to 1800 CC which were already subjected to fixed rate of import duty.
Importers said that move will help the government to reduce revenue loss suffered due to arbitrary fixing of import duty and will help to eliminate the variation of taxes in all the ports of country. Resultantly, the collection of taxes will be increased.
APDMA said the notification titled C.G.O. 01/09 dated 13-01-2009, has deprived the legal, social and ethical right to obtain the depreciation @2% per month on old and used vehicles of above 1800cc imported by Overseas Pakistanis.
This facility was available for the last 30 years, before it was abruptly withdrawn. As per current S.R.O. the depreciation on the taxes and import value of used vehicle is @ 1% per month. The importers are already paying high tariff rate on account of Regulatory Duty a, 60% on the vehicles of above 1800cc (Cars & Jeeps) and devaluation of currency.