The government recently announced the budget for the fiscal year 2018-19. It was announced in the budget that any eligible person whose name doesn’t appear on the Active Taxpayers’ List will not be able to purchase vehicles.
However, car assemblers/manufacturers have urged the government to review its decision as the same will cause a drastic reduction in automotive sales.
Pakistan Automotive Manufacturers Association (PAMA) has suggested some changes in the budget that could otherwise harm the auto industry if not addressed immediately.
In a letter written to the Finance Minister Miftah Ismail, PAMA Director General Abdul Waheed Khan has highlighted the issue of new restriction saying that the new section 227C in the income tax ordinance that restricts non-filers from purchasing motor vehicles will affect the sale of vehicles in the country.
He emphasized that there are about 1.2 million filers, and after this new condition is put into effect, only filers would buy vehicles which would result in a sudden drop in sales.
He claims that if the filer condition stays industry volume projections of selling 550,000 units a year, under the Auto Policy 2016-21, would be lost.
The new entrants would see this new condition alien to the auto policy. All those big names presently heading to our market would be frustrated with this new condition and would lose their confidence in our policies, he quoted.
“Besides major adverse consequences to the industry the new condition would also be counterproductive; government losing the revenue of second highest revenue paying industry,” said Abdul Waheed Khan.
He also suggested a scheme that would help the government to bring non-filers in the tax net. He proposed different tax rates for filers and non-filers for the next five years encouraging the citizens to file tax returns to pay comparably less tax on passenger cars and commercial vehicles (trucks/buses).
PAMA DG further said that “We find no merit in imposing the impugned new condition and request the same to be withdrawn. We know the government since pursuing the policy of making things difficult for those out of the tax net. Some major steps have already been taken in that direction previously and also taken in this budget.”