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Discouraging import: FBR identifies luxury items to impose regulatory duty

By Mehtab Haider
September 29, 2021
Discouraging import: FBR identifies luxury items to impose regulatory duty

ISLAMABAD: The Federal Board of Revenue (FBR) has identified over two dozen major import items for slapping massive regulatory duty with an aim to slash down the import bill by $800 million (135.6 billion) per month.

The Tariff Policy Board is expected to meet next week under the chairmanship of Adviser to Prime Minister on Commerce Abdul Razak Dawood, in which different stakeholders, including ministry of industries and FBR will finalize a proposal to levy massive regulatory duty for the purpose of discouraging imports.

The high import bill widens current account deficit that has already ballooned to $2.3 billion in the first two months of the current fiscal year. “The Tariff Policy Board will also take up the issue for moving ahead with zero duty on imports from Afghanistan unilaterally for time being. However, the State Bank of Pakistan (SBP) has been assigned to conduct a detailed study on impact assessment for allowing imports from Afghanistan at zero rates. Keeping in view the outcomes of SBP’s assessment, the TPB will finalise recommendations for forwarding summary before the Economic Coordination Committee of the Cabinet,” sources disclosed while talking to The News here on Tuesday.

The FBR, according to the top sources, identified two dozen imported items such as automobile, packed foods, animal foods, blankets, tyres, cosmetics, master baths, varnishes, stationery, different products of textiles, sweeteners, and others. Earlier, dry milk was also included in the list for the enhanced rate of RD but the Ministry of Food Security opposed the move, and this item was dropped.

Ministry of Industries and Production and FBR have proposed the imposition of 50 percent RD on the import of electric vehicles having more than 50 kWh battery packs. Due to a decrease in custom duty on electric vehicles in completely built-up unit condition from 25 to 10 percent, the import of high and EVs is resulting in an increase in the current account deficit.

There is another proposal to increase the RD from 15 percent to 50 percent on hybrid vehicles ranging 1501cc-1800cc. This intervention will discourage the import of vehicles in CBU conditions and improve the current account deficit.

The regulatory duty on CBU import (normal gasoline vehicle) is likely to increase from 15pc to 50 pc. Besides, enhancement of Federal Excise Duty (FED) from existing 5 pc to 10 pc on locally manufactured cars/SUVs — 1501cc and above — is also on the cards.

The FED on completely knockdown (CKD) manufacturing is slated to increase in view of the current financial crunch. However, All Pakistan Textile Mills Association (APTMA) strongly opposed the move of imposing regulatory duty on the export of cotton yarn. They stated that it would not only distort the momentum gained in exports after decades but would also disturb the continuity of government policies for export-led growth.

Abdul Rahim Nasir, Chairman APTMA, said in a statement that a certain group with vested interests were busy making unnecessary hue and cry for levying RD on the export of cotton yarn on false pretexts with the intent to agitate the historic high trend of textile exports, roll back investment of more than $4 billion and to deprive the country of projected additional 500,000 jobs.