News Guides Comparisons Specs & Price

Government Wants to Reduce Car Taxes to Mitigate Price Hikes: Report

The ongoing price hikes have become a massive concern for car buyers across Pakistan. Economy car buyers, in particular, have suffered greatly.

The government has taken notice of the matter and is working to address it. In a recent parliament session, the Ministry of Industries and Production (MoIP) proposed tax reductions in the auto sector’s 2022-23 fiscal budget.

According to media reports, MoIP has suggested the following tax reductions on new cars:

  • 2.5 percent reduction in Federal Excise Duty (FED)
  • 2 percent reduction in Additional Customs Duty (ACD)

MoIP noted that car companies have already increased prices several times prior to the budget announcement, citing depreciation of the local currency, rising raw material costs, and freight costs.

Recent Notice

Last week, Engineering Development Board (EDB) issued a stern warning to local car assemblers against price hikes. According to an official document, the board asked them to provide their cost structures and justification for the recent hikes.

It summoned a meeting regarding the matter on May 10, 2022, in which, it requested the presence of the respective CEOs of nearly all local automotive groups. The reports of MoIP’s proposal to reduce taxes for the auto sector have come immediately after EDB’s meeting with senior representatives of the auto industry.

Automaker’s Stance

Automakers are adamant that they have no choice but to increase the prices of their cars due to the value and supply chain issues.

They have also openly criticized the government’s plans to fix car prices, saying that Pakistan is a free market and that the automakers have a right to regulate the prices of their products however they see fit.

The polarity of government’s and automakers’ views has evidently subsided following EDB’s meeting with CEOs of various automakers in Pakistan.