Pakistan Tehreek-e-Insaf (PTI) government is all set to present its first federal budget on 11th June 2019. Along with other sectors, the automobile sector, too, is expecting something new and good from this budget. It is worth reminding our readers that this sector has been at the receiving end for the past many months in terms of declining sales and increasing automobile prices.
However, a day before the budget is tabled in the National Assembly, the automobile sector is jittery. The reason for this is the present government’s haphazard policies, which it has pursued ever since August 2018.
Let’s examine what the automobile sector can expect from the upcoming federal budget:
10% FED on 1700 cc and above cars
It has now long been speculated that the government is mulling to withdraw the 10% Federal Excise Duty (FED) on vehicles of 1700 cc engine capacity or above. However, no final decision has been made in this regard, so there is an expectation that the government will announce its final verdict on this matter in the upcoming budget. The imposition of FED has negatively affected the sales of Honda Civic 1.8 and Toyota Corolla Grande. The consumers are supposed to pay 10% FED i.e., roughly Rs.3.5 lacs on top of the actual price of these cars, which is around Rs.3.5 million.
Uniform series of registration numbers
Secondly, it is proposed to launch a uniform series of registration numbers in the province of Punjab. The reason behind this proposal is none other than abolishing the favoritism factor. Most of the people tend to register their vehicles in cities like Lahore and Islamabad. The vehicles registered in large cities also get a higher resale value. To eliminate such practice, the government is looking to introduce this uniform scheme to encourage people to register their vehicles in their own cities and not worry about the variable resale value of the cars.
Luxury tax on vehicles in Punjab
According to the Punjab Minister for Excise and Taxation Hafiz Mumtaz Ahmad the government is expected to waive off the luxury tax on the registration of vehicles in Punjab. The imposition of luxury tax from the Punjab Excise Department was supposed to increase the revenue, but unfortunately, it backfired. It has been a real cause of concern for the province as there is no luxury tax imposed on the vehicle registration in the federal capital Islamabad. As a result, a majority of owners tend to register their vehicles in Islamabad. He further said that before the implementation of this tax, almost 15,000 luxury vehicles were being registered in the province every year, which suddenly dropped to nearly 2000 registrations after the imposition of the luxury tax.
It can be safely assumed that once the luxury tax is waived off, it would improve the revenue generation in Punjab again.
Let’s hope that the PTI government presents a friendly budget for the automobile sector, which allows considerable growth, attract investors, and at the same time generates a good amount of revenue.
What is your opinion regarding the expected changes in the automobile-related policies in the upcoming budget? Let us know in the comments section below and stay connected with PakWheels for more updates.
