KARACHI: Pakistan has completely abolished regulatory duties on the import of used cars of up to 1,800cc. It also cut duty rates for new cars, mobile phones and other range of goods drastically that will significantly cut end consumer prices.
The decision has been taken after the government’s policy to contain imports through heavy taxation hardly made an impact of $400 million but severely impacted businesses across the country.
The two Statutory Regulatory Orders (SROs), which governed the increased rates of regulatory and additional custom duties, expired on March 31st after the chairman of the Tariff Policy Board refused to further extend their validity period.
As a result, consumer items, notably new and old cars, high-tech mobile phones, home appliances, meat, fish, fruits, vegetables, footwear, furniture, musical instruments, dog and cat food and ice-cream will become comparatively cheaper.
The consumers of old used cars of up to the 1800 cc category will get major relief with 100% regulatory duties being done away with. The new cars in this category will still attract 15% regulatory duty in addition to other taxes. Regulatory duty rates on mobile phones have been halved across all the categories as a result of the expiry of the SROs.
About 500 to 700 imported cars of various engine capacities that are stuck at the ports due to non-availability of foreign currency will also benefit from the reduced taxes.
While there will be no regulatory duty on used cars of up to 1800cc, there will still be regulatory duty on new cars of over 1800 cc, albeit at very low rates, providing a major reduction in prices. The additional custom duties also stand withdrawn on these vehicles.
People do not have a choice but to import used cars due to low production and poor quality of locally assembled cars. The current economic crisis, however, has affected car consumers significantly. Some of the benefits of reduced rates will be offset due to currency devaluation.