In the recently announced Finance Supplementary (Second Amendment) Bill, 2019, the government has announced changes that will impact the country including Pakistan’s automotive industry.
The bill has lifted the restriction on non-filers that prevented that from buying cars over 1300CC. Under the new bill, they can now buy any locally manufactured car regardless of the engine capacity.
In another development, the government plans to levy a 10% federal excise duty (FED) on locally manufactured cars with an engine capacity of 1700 CC and above. Before this bill, an FED has been proposed for vehicles of 1,800cc and above.
If the FED is levied, the prices for vehicles like Honda Civic and Toyota Corolla Grande variant will be impacted; the former has an engine displacement of 1799CC while the latter 1798CC. Both these vehicles did not come under the FED before this bill.
Both cars are currently selling for about Rs. 2.8 million according to the company websites. When the FED is applied, both variants’ prices will increase by Rs. 280,000.
This will also impact other variants of the Grande as well, including the 1.8L Altis-MT, 1.8L Altis CVT-i, 1.8L Altis Grande-MT and 1.8L Altis Grande CVT-i as they all have an engine displacement of 1798CC. If the bill is passed, the prices for all these cars will go up.
It is interesting to point out that under the previous bill, Honda complained the bill had placed a restriction on non-filers by preventing them from buying cars with an engine displacement of more than 1300CC. Honda’s most selling models, the Honda City and Civic, are 1339CC and 1799CC, respectively.
The government has also increased the FED on imported luxury cars above 1800cc from the existing 20% (imposed in January) to 25% in the supplementary budget. The duty on imported vehicles over 3000cc has been raised to 30%.
Bad decision to allow people with unaccounted for money to buy cars as nonfilers.
Filers should be exempt from FED and otger taxes since they are already paying and declaring their taxes.
Yet again the local car assemblers cartel has prevailed against the Federal Govt. and has succeeded in getting the decisions in their favour. I dont know why any government could not resist the demands of this cartel.
I guess the Competition commission should come forward and make its presence felt.