ISLAMABAD, May 9: The government is considering abolishing regulatory duties on more than 399 luxury items, scale down customs duty to 25 per cent on all products in budget 2011-12. However, the FBR is opposing the move on the plea that it could lead to revenue loss to the kitty, Dawn has learnt.
A phased reduction in customs duty from 25 per cent downward could also be announced in the budget to bring it at 10 per cent uniform rate, which would be at par with the Indian maximum import duty in the region. There are several tariff slabs including zero, five, 10, 15, 20, 25, 35, 50 per cent etc on import of goods.
The uniformity in customs tariff means that duty on individual products should be the same for all kind of importers, including traders irrespective of giving preferences to manufacturers over commercial importers. It is also being considered to cut down customs duty to a maximum uniform rate of 25 per cent on import of all types of motor cars along with components and 20 per cent on motorcycles in the first phase.
A senior government official told Dawn on Monday that these recommendations were evolved in a study commissioned by Planning Commission of Pakistan. The recommendations have been submitted to the Economic Coordination Committee for consideration ahead of the budge
The FBR, according to the official source, agreed to review withdrawal of regulatory duty on those items in the budget, which do not have major revenue impact but still has the reservation to bring down the over all custom duty rate to a uniform 25 per cent, a level maintained during the year 2002-03.
But the ministry of industry and National Tariff Commission have raised objections over the recommendations seeking reduction in the regulatory powers enjoyed by them in providing protection to the local manufacturers. It was proposed to bring down the customs duty to a maximum 10 per cent in a phased manner on import of motorcycles and its components to bring down its prices within the reach of the common people. However, it suggested announcing a further
tariff cuts and other basic changes to the auto sector policies.
And the study recommends to the budget makers to bring down immediately customs duty to 10 per cent on import of textile and clothing from existing 25 per cent, a decision which would attract maximum resistance from the local manufacturers who enjoy tariff and non-tariff protections.
The study, titled Pakistan’s Trade Policies: Future Directions is conducted by Gery Pursell, a former employee of World Bank and an ex-Pakistan secretary of commerce and trade group Ashraf Khan for the Planning Commission.
It was recommended to do away with the licensing regime to avoid control of imports and exports of goods. The specific duty
on certain goods like edible oil should also be converted into ad val in the upcoming budget.
It has been proposed that all concessionary tariffs should be available to all importers, especially traders and commercial importers; remove discrimination in levy of sales tax and withholding tax on imports of all kinds, abandon the present cost plus and principle of cascading approaches to the tariff setting.
It is also being considered to cut down customs duty to a maximum uniform rate of 25 per cent on import of all types of motor cars along with components and 20 per cent on motorcycles in the first phase.