- Ministry of industries proposes five-year tariff policy with annual cut in tariff
Staff Report
ISLAMABAD: Prime Minister Shaukat Aziz will examine the proposals submitted by the Central Board of Revenue (CBR), ministry of industries and production, Board of Investment and representatives of the auto industry on the proposed auto policy before submission to the Economic Coordination Committee (ECC) of the Cabinet, official sources informed here on Wednesday.
The ECC at its previous meeting had returned the proposed policy with the direction to the ministry concerned to submit it again within 30 days after consulting on this policy with stakeholders such as the ministry of finance, CBR and Board of Investment.
The sources said the ministry has proposed a five-year pre-announced tariff policy with annual reduction in tariff by certain percentage points to address these problems, while at the same time enabling local assemblers and potential foreign investors to take long-term investment decisions and make necessary adjustments.
The ministry had proposed a 50 percent tariff for localized parts of cars in 2006-07, followed by 50 per cent in 2007-08, 45 per cent in 2008-09, 40 percent in 2009-10 and 35 percent in 2010-11. Tariff for non-localized parts had been proposed at 35 percent in 2006-07, followed by 32.5 percent in 2007-08, 30 percent in 2008-09, 27.5 percent in 2009-10 and 25 percent in 2010-11.
The ministry is of the view that there should not be any duty on raw material for vendors while a five percent duty has been proposed for sub-components. In CBU condition, the ministry has suggested 50 percent tariff for cars up to 1500cc in 2006-07, 47.5 percent in 2007-08, 45 percent in 2008-09, 42.5 percent in 2009-10 and 40 percent in 2010-11.
Cars of 1500 to 1800cc would have a 65 percent duty in 2006-07, followed by 60 percent in 2007-08, 54 percent in 2008-09, 47 percent in 2009-10 and 40 percent 2010-11 while a 75 percent duty has been proposed for cars exceeding 1800cc in 2006-07, 70 percent in 2007-08, 65 percent in 2008-09, 60 percent in 2009-10 and 50 percent in 2010.
The ministry has proposed a 20 per cent duty on LCV (CKD kits) not exceeding five tons during the current year, 19 percent in 2007-8, 18 percent 2008-09, 17 percent in 2009-10 and 15 percent in 2010-11.
On CBU, the ministry has proposed 60 percent duty, followed by 55 percent in 2007-08, 50 percent in 2008-09, 45 percent in 2009-10 and 40 percent in 2010-11.