Cars and taxes

The government’s decision to impose regulatory duties (RD) on steel import and auto parts and the drastic devaluation of the rupee has aggravated the impact of inflation on the automotive industry. A proposal has recently been floated by the Ministry of Finance to raise RDs by 12.5 percent for vehicles that fall within the 800cc-1000cc category, and for steel products including bar/scrap on aluminium, which is heavily used in the manufacturing of cars and light commercial vehicles. RDs are imposed to curb the demand for imported products and raw materials that are available in the country. However, Pakistan is unable to produce enough steel to meet the industry demand. For over a year, the automotive industry has been demanding an exemption from these duties, but no concrete steps have been taken in this regard to date.The government needs to come up with transparent and consistent policies for the growth of the automotive industry. The SC should take prompt measures to deal with the unfair imposition of RDs as this sector is already heavily taxed, and the increased input costs are putting immense pressure on the local auto industry, while regulatory duty (RD) on steel is playing a major role in raising production cost.

Ali Hammad Jafri ( Karachi )