The lack of a General Sales Tax (GST) rate exemption on the import of buses has “ruined the efforts” of the Lahore Transport Company (LTC) to expand public transport services in the city and it is unclear whether the Federal Board of Revenue (FBR) will agree to exempt buses from the levy, said LTC chairman Khawaja Hassaan on Monday.
The company had been planning to run an extra 200 buses in Lahore by June, but transport companies baulked when it was announced in the federal budget that the new sales tax would also apply to the buses.
The LTC, on behalf of the Punjab government, assured the transport companies that it would negotiate with the FBR to get an exemption. A month and a half later, and the company chairman admitted that there had been no progress.
“This GST has totally disturbed our plan to overcome the shortage of buses. We are in negotiations with the federal government but I’m not sure what the end result will be,” Hassaan said.
Chinese company Foton Bus Service and local company First Bus Service signed an agreement earlier this year for the import of 200 buses.
The project was delayed when the federal government refused to exempt the import from the 16 per cent tax.
Still, the LTC later announced it would add a further 2,000 buses to the streets of Lahore, with 300 to be introduced “very soon”, without mentioning dates.
The tax has raised the cost of one bus to Rs1 million, said a representative of the First Bus Service. “We were waiting for good news from the LTC but I don’t think it is going to happen now,” said general manager Maqsoodul Haq. “In fact we’ve heard that the FBR has rejected the LTC’s request.”
He said that the tax had made the new buses too expensive and would delay the deal. “We are not sure if we can sustain the service in the long run as we’re already facing losses and the LTC is not giving the subsidy they promised,” he said.An official of Foton Bus Service, who identified himself as Joe, said the tax was not the company’s concern. “If the LTC wants us to operate with the promised fleet of buses, they will have to do something about the GST,” he said.
Published in The Express Tribune, July 19th, 2011.
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