Prices of 376 imported items go up

ISLAMABAD: By expanding the scope of Regulatory Duty (RD) on non-essential and some essential items for reducing the rising import bill, the Federal Board of Revenue (FBR) has slapped and enhanced RD in the range of 5 to 80 percent on a total of 376 tariff lines by bringing 136 new tariff lines and raising the rate on 240 tariff lines.

The RD has been used to bypass parliament as the duty has been enhanced and imposed on new items through issuance of SROs and without seeking prior approval of parliament. At the end of the fiscal year, all SROs will be brought before parliament. 

The FBR has introduced new Statutory Regulatory Order (SRO) after merging eight old SROs, FBR’s Member Customs Zahid Khokhar confirmed to The News on Tuesday night and added that the rate of RD was changed on total 376 tariff lines.

The FBR issued the much-awaited SRO after getting approval of the ECC and had to wait for issuance of official minutes.  The imposition of RD on new and existing tariff lines is  aimed at controlling yawning trade deficit that had hiked to over $31 billion in last fiscal year.

“This short-term measure is aimed at curtailing the trade deficit,” said one official who also conceded that the existing political turmoil was impacting the decision-making process as this step must have taken in July or August this year but the indecisiveness wasted several months. 

Earlier, the RD was used to discourage imports of non-essential items but now this distinction was done away with by bringing some daily use items into the RD list. The FBR brought brooms into the RD net at rate of 20 percent, toothbrushes including dental plate 40 percent, diapers 20 percent and napkins @ 10 percent. 

Through a notification issued by the tax authorities here, the FBR enhanced and doubled the RD on 240 tariff lines while they also brought 136 new tariff lines for making efforts to discourage imports. Earlier, the RD was used to discourage import of non-essential or luxury items but this time the FBR abolished this exception and brought some daily use items into the net of RD with the intention to reduce the imports.  

The FBR has merged different SROs and come up with single Statutory Regulatory Order (SRO) for slapping RD on different items.  The taxed items include dairy products, poultry, cellphones, milk, vegetable, fruits, dry fruits, cigarettes, chemical and petroleum products, fabrics and garments, iron and steel, vehicles, home appliances, power generating units and parts and sports goods. 

The FBR brought furnace oil into net of RD at rate of 2 percent, mineral water @ 20 percent, aerated waters @ 40 percent, Soya sauce @50 percent, tomato ketchup and other tomato sauces @50 percent, Mustard flour and meal and prepared mustard @ 50 percent, tomato juice @50 percent, new all-terrain vehicles (4x4) @ 80 percent, old and used all-terrain vehicles (CBU) @ 60 percent, other (New) @ 80 percent, old and used cars and jeeps above 2000 cc @ 60 percent, old and used cars and jeeps above 2500 cc @ 60 percent, Pistols, single barrel, semiautomatic or otherwise @ 20 percent, Pistols, multiple barrel @ 20 percent, Single shot, Semiautomatic @20 percent, Other arms (for example, spring, air or gas guns and pistols, truncheons), excluding those of heading 93.07 @ 25 percent, Wooden furniture of a kind used in offices @40 percent, Illuminated signs, illuminated name plates and the like @50 percent, Video game consoles and machines, articles for funfair, table or parlour games, including pintables, billiards, special tables for casino games and automatic bowling alley equipment @50 percent, Articles and equipment for table tennis, Lawn tennis rackets, whether or not strung, Badminton rackets, Squash rackets and  Lawn tennis balls at rate of 50 percent.

The FBR imposed RD on LCD & LED with rate of 40 percent, Pocket size radio cassette players at rate of 20 percent, Cellular mobile phone at rate of Rs250 per set, microwave ovens, electric oven, electric ranges, electric roasters/grillers, coffee or tea makers, toasters, other (electric heating resistors) at rate of 20 percent, food grinders, fruit mixers, fruit or vegetable juice extractors, hair dryers, other hairdressing apparatus, hand drying apparatus, electric smoothing irons, water dispenser at rate of 35 percent, incorporating a refrigerating unit and a valve for reversal of the cooling/heat cycle (reversible heat pumps) at rate of 40 percent, other, incorporating a refrigerating unit at rate of 40 percent, not incorporating a refrigerating unit @40 percent, combined refrigerator freezers, fitted with separate external doors@40 percent, compression type @40 percent, freezers of the chest type, not exceeding 800 l capacity @40 percent, freezers of the upright type, not exceeding 900 l capacity @40 percent, other furniture (chests, cabinets, display counters, show cases and the like) for storage and display, incorporating refrigerating or freezing equipment @40 percent, combined harvester (above 10 years old) @20 percent, fully automatic machines @40 percent, flat rolled products of iron or non-alloy steel, of a width of 600 mm or more, hot rolled, not clad, plated or coated @ 12.5 percent, bars and rods, hot rolled, in irregularly wound coils, of iron or non-alloy steel @ 30 percent, other bars and rods of iron or non-alloy steel, not further worked than forged, hot rolled, hot drawn or hot extruded, but including those twisted after rolling @ 30 percent, other bars and rods of iron or non-alloy steel @ 30 percent, angles, shapes and sections of iron or non-alloy steel @ 30 percent , wire of iron or non-alloy steel @ 30 percent, shampoos @ 50 percent, preparations for permanent waving or straightening @ 50 percent, hair lacquers @50 percent, cream for hair @50 percent, dyes for hair @50 percent, yarn used to clean between the teeth (dental floss) @50 percent, pre shave, shaving or after shave preparations @50 percent, personal deodorants and antiperspirants@ 50 percent,  Perfumed bath salts and other bath preparations @ 50 percent, "Agarbatti" and other odoriferous @20 percent, non-alcoholic beer @20 percent. 

Early this month, the Economic Coordination Committee of the cabinet approved various measures to rationalise imports and reduce import bill proposed by the Commerce Division and FBR. 

Officials in the Pakistan Customs said the duties would discourage import of non-essential items to curtail current account deficit and generate revenue to reduce fiscal deficit.  The State Bank of Pakistan (SBP), in its latest report, projected fiscal and current account deficits at 5 to 6 percent and 4 to 5 percent for the current fiscal 2017/18 as against the government targets of 4.1 and 2.6 percent, respectively.

The SBP, in another report on Pakistan-China free trade agreement, said flooding imported goods debilitated the small and medium enterprises sector.  Customs officials said imported products on which duties were imposed are locally manufactured and local industry is unable to compete with the imported substitutes due to high price.    

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) agreed that the levy was necessary to bridge the trade gap. 

“The list mostly contains items that are manufactured locally,” Zubair Tufail, president of Federation of Pakistan Chambers of Commerce and Industry, said.  Tufail said the government had decided not to go for any new loan program and so the trade gap would be reduced through such measures. 

The Federation of Pakistan Chambers of Commerce and Industry chief said trade deficit alarmingly increased to $32.5 billion during the last fiscal 2016/17 with imports of $53 billion.  “The step to impose regulatory duty not only reduces dollar demand, but also stabilises local currency,” he added. 

Karachi Chamber of Commerce and Industry (KCCI) is, however, not happy with the regulatory duty decision, saying and that was so without consulting the stakeholders.  “Our research department is currently ascertaining the levy impact on local market,” Mufassar Ata Malik, president of Karachi Chamber of Commerce and Industry said. 

The latest duty notification superseded previous notifications of June 2009, September 2009, March 2010, June 2014, November 2014, March 2015, April 2015 and  December 2015, which imposed regulatory duties on various items. 

Customs officials said the new rates have been updated on the online system, Web-based One Customs, for immediate recovery of duty and taxes effective from October 17. FBR, however, exempted various industries from regulatory duties on import of goods.