It is hard to make heads or tails of the present government’s auto policies. On one hand, it has restricted the import of CKD kits, forcing local manufacturers to shutdown their plants, on the other hand it has imposed additional taxes to the tune of 500% on imported cars. In the end, it is the end consumer which has suffered.
The Road to Hell Is Paved With Good Intentions
From seriously mulling banning the import of foreign cars to imposing heavy regulatory duty on their import, successive governments in Pakistan have tried their best to protect the local auto manufacturers.
To get a perspective on this subject, do read: Govt to Raise 50% Tariffs On Import of Cars and Regulatory Duty (RD) and Customs Duty on Imported Cars Increased
This “appeasement” has not worked however. Local auto manufacturers, feeling next to no foreign competition, as result have not only continuously jacked up the prices of their vehicles but have also let their customers wait sometimes over a year for delivery.
Which Additional Duties and Taxes Are Imposed on Imported Cars?
As if massively jacking up regulatory duty wasn’t enough, it has been recently discovered that the government has further imposed taxes and duties worth almost 500% on the import of cars. This has been done by further increasing the federal excise and income tax, sales tax and additional sales tax, customs duties and additional customs duties rates.
Proposed Solution
The Public Accounts Committee (PAC) has recommended that the government stops treating the local auto manufacturers as “manufacturers” and starts treating them “assemblers”. The rationale behind this is that by legally treating them as assemblers they would not be able to enjoy government’s protection anymore, or at least not of the present level.
Is This a Good Solution?
To figure out whether protectionist policies are actually being implemented to protect the local manufacturers, one must remember that whenever there is an economic crunch, the government tries to curtail its import bill. The main objective is to stop the outflow of the US Dollar.
As Pakistan continues to go through a very bad economic patch, to put it mildly, the government still wants to stop the outflow of the Dollar; making protectionist policies is just a way to get there.
Simply put, the government does not want Pakistanis to import cars. So, changing the status of local auto manufacturers to assembers won’t make a lot of difference.
What do you make of this news? Are you in favor of buying imported cars over local cars but cannot due to their price? Let us know.
To know the latest updated prices of locally manufactured cars, don’t forget to visit our New Car Page.
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