Impact of increase in advance Tax on "OWN Money" culture?

[shuja.hassan]

As federal government has presented the mini-budget and proposed following tax rate change.

Advance Tax on Vehicle Registration of cars up to 1000cc will increase to Rs100,000 from Rs50,000.
Advance Tax increase on 1001cc to 2000cc cars to Rs200,000 from Rs100,000.
Advance Tax on 2100cc and above cars will increase to Rs400,00 from Rs200,000.

what is your expert review on it? Will it help to decrease this OWN culture or become the cause of increase in Car prices accordingly? I guess the promoters of OWN culture in Pakistan would revise the car prices correspondingly and ultimately the end user will be affected more. Will this step manifest better economy?

[mehran]

My only complaint is that people who have made 100% payment for a vehicle and have not received it due to delays by the car assemblers, should not be subject to any price increase. It's not the buyer's fault that the car assembler doesn't have the capacity to deliver cars on time.

'On' culture is prevalent world over on most luxury car brands however in Pakistan, unfortunately, even the most cheap econobox commands a substantial premium. Investors won't lose anything with any additional taxes/ conditions. They will simply pass it on to the buyer who will pay. Virtually impossible to stop 'On' or investors mafia.

[shuja.hassan]

Exactly
By increasing advance tax, we would not be able to decrease this OWN Culture However the ultimate buyer or end user will be badly affected. This won't help us to restrain this culture in society. On the other hand in long run it will cause the increase in inflation as well.
Neither, even collectively as a society we can strongly condemn this nor we will stop buying cars with premium amounts.

What do you think, if we started selling new cars only on buyer name after completing whole registration process? Will it help?

[mehran]

I doubt it. For example, I need a car urgently. Ideally I should go to a dealership and buy a car from the inventory available at the dealership and drive home. Unfortunately, this doesn't happen in Pakistan. I have to book a car (if booking is open) wait a few months (subject to price increase) and finally get a car. To avoid all this I would pay over the car's retail price and transfer car to my name from the investor's name. A genuine buyer is forced to do this. I see no solution but to pay On and buy a car instantly. Really sorry

[shuja.hassan]

I am unable to understand this concept. Suppose If you book a car today in December 2021 and car's delivery is expected in April 2022 and we pay say almost 12 Lac for booking today, then why this deal would be subjected to price increase?
Why total price of car is not fixed at the time of booking? As far as my knowledge is concerned we are doing a Forward buying, when we book a car. So the price and expected delivery date should not be changed.
Isn't this falls under forward buying?

[pwuser162133868073]

I doubt if this would end the “on” culture
Government only perspective from change is to make money alongside dealers/investors who are part of this “over and above” gain

[shuja.hassan]

What is the possible solution to reduce this OWN culture in Pakistan? Because if it continued with the same percentage of increase, ultimately the Economy will be affected badly.

[mehran]

I think virtually impossible to stop this 'On' culture until and unless car assemblers increase their productivity. If a car can be delivered within 30 days of booking then no one will buy a car on 'On' unless very very desperate. Govt can impose all sorts of taxes and penalties but investors will find a way to avoid them. Only solution, which I can see, is for assemblers to increase productivity.

[shuja.hassan]

Yes I guess this would be one possible way to reduce this OWN Culture Even if car manufacturers started to deliver cars within committed time frame may help to reduce. Usually if someone is given a time frame of 6 months, I observed customer cannot get car even after 6 Months. It also leads to move genuine customer to the dealerships and they paid a penalty in the name of premium in order to get their desired car on time.
What so ever our government should make some strict policies for these car manufacturers if they really want to boost economy.

[uzeemujeeb]

sir ji
in 3rd world countries buying a new car is capital investment. 8 to 16 weeks is very common waiting time after a deposit is collected by oem.

OWN / Premium culture can not be blocked unless the GOVT devise a policy. Which was tabled 21 times in past 15 years but he Industry Giants by default opposed it and used pressure groups to stash away such policy.

the core points of that policy paper was:

1. A person depositing an amount to purchase brand new vehicle can not sell or de-register the vehicle for 90-120 days after delivery from OEM. if need be new registrant will be charged transfer fee equivalent to new vehicle registration.

2. The vehicle if repeatedly sold within 3 years of 1st registration buyer will be charged with 50% - 25% of WHT as the case may be, as per new value of that model car for transfer.,

3. For non-filers WHT shall be 30% of vehicle value.

but alas the giants are real muscle to play and act smart.

[zee5han]

@shuja.hassan
I think if the govt implements a policy in which, lets suppose I book a car with booking amount of 12 lac and total price is mentioned on PBO then dealer should be bound to give me my car at that price without increase , regardless of dollar or tax increase.

Talking to my peers the most common excuse for buying on OWN is , why would I wait 6 months and THEN pay more than what I can get currently with OWN.

So buyer is being punished two ways , first the waiting period and then eventually the car is more expensive than what they could have gotten at booking time with own

[shuja.hassan]

@uzeemujeeb
The core points of policy which you shared above, was purposed but not implemented? Right?
I guess these are some authentic point and help to reduce this culture and will be beneficial for end users.

[shuja.hassan]

@zee5han
Yes dealer must be bound to deliver the car as per the mentioned price on PBO at the time of booking. In such Future contracts price should not be changed. Even if there is any change in dollar price and Tax rate, the price of car must not be exceeded from the price done earlier. This would help as well.

[Massive_One]

I am unable to understand this concept. Suppose If you book a car today in December 2021 and car's delivery is expected in April 2022 and we pay say almost 12 Lac for booking today, then why this deal would be subjected to price increase? Why total price of car is not fixed at the time of booking? As far as my knowledge is concerned we are doing a Forward buying, when we book a car. So the price and expected delivery date should not be changed. Isn't this falls under forward buying?

the problem is, as sunil sir said, ethically and morally companies should do this, but contractually they are not bound to do this.. in fact, the contract says prices at the time of delivery will apply : (

the only thing is that govt. has to step in at these matters to safeguard consumers benefit and make policies that go in favor of consumer and at the same time does not hurt the business ... but then again... u know how our govts. work : /

[shuja.hassan]

@Massive_One
Companies will never be done anything ethically and morally correct. This is not there concern but yes as consumer I guess this is our responsibility to take a stand for our rights. As you said, as per the contract it is mentioned on it that the prices at the time of delivery will apply then why consumers make a deal blindly? As no body expect any exact prices of dollar and taxes in future to we should make a solid decision or we should raise a voice for this. Prices must be agreed at the time of booking so customer already knew the actual price and make decision accordingly.

[saadtiger412]

3s dealerships are also involved in this own business.

[engineerjibran]

Own culture is there but not everybody is buying a car on own money , it is due to poor regulations , economic policies and ever increasing dollar rate that a wait of 4 months seems like additional 4 lac on the car so the end user thinks that its better to spend that money now and get the car. The advanced tax wont help curb the own thing.

[mehran]

Investors will just find a new way around the Advance Tax. Even I can think of a way and I'm far from being an investor. Taxes and fines are not the solution. Wise and carefully formulated economic procedures favouring the customer are the way forward

[xenerking]

Japanese manufacturing is based on JIT, they will start making the product after receiving money for it, so the waiting time is bound to happen, now it depends upon manufacturing facility is running how efficiently and how many resources have been applied. i don't think there is anyone from govt authorities is even allowed to visit the premises of manufacturers other than to receive free gifts and services. so who can question them as to how many resources are employed to do the job within stipulated time.

Fees, taxes and penalties should be applied on both sides, i suggest 1% of value of car should be fined to manufacturer for each day delayed from the delivery date, then i will see how they will delay car deliveries, even there will be ready stock available at dealerships.

it all depends upon the strength of economy.

had our economy been self reliant, these company would have been chasing us to sell the cars.

[capsat]

the GOVT devise a policy. Which was tabled 21 times in past 15 years but

The core points of policy which you shared above, was purposed but not implemented?

ہزاروں خواہشیں ایسی کہ ہر خواہش پر دم نکلے