The Economic Coordination Committee (ECC) on Wednesday decided to release around 700 vehicles stuck at ports, waived recently imposed taxes of up to 128% and allowed importers to get their vehicles cleared by paying surcharges.
The decision will also be applicable to other stuck goods that reached the country by August 18 and were earlier allowed to be cleared but stayed on ports. Federal Minister for Finance Miftah Ismail virtually presided over the ECC meeting from New York.
“The ECC considered a summary of the Ministry of Commerce on the clearance of stuck consignments and directed that the consignments of previously banned items that landed in Pakistan till August 18, 2022 may be released at the rate of surcharge,” said a statement issued by the Ministry of Finance.
While lifting the ban on August 19, the cabinet gave directives for releasing the goods lying at ports on the payment of surcharges and penalties on the basis of assessed value of the goods, in the range of 5% to 100%. The cabinet approved the imposition of regulatory duty to discourage their imports.
The ECC was informed that the new rates of regulatory duty and additional customs duty had become applicable with effect from August 22 and the Goods Declarations filed on and after August 22 were subject to the new duty rates.
The Ministry of Commerce stated that some businesses had approached complaining that they were not able to get their consignments cleared because new rates of regulatory duty and additional customs duty had been added to the WeBOC system. Besides surcharges, the new duty rates had also become applicable, hence they were facing double penalty.
The ECC decided that these goods should be cleared only on the payment of surcharges. An official of the Federal Board of Revenue (FBR) said that around 700 vehicles of various engine capacities were stuck at ports that could now be cleared by paying surcharges provided the cabinet also endorsed the ECC’s decision.
The clearance of vehicles will give revenue of over Rs2 billion to the FBR that is facing challenges in meeting monthly tax targets.
Last month, the cabinet allowed the release of held-up consignments of vehicles, mobile phones and home appliances on payment of 100% penalty.
After that, the government targeted 49 tariff lines of vehicles with 10% to 100% regulatory duty and 7% to 28% additional customs duty. These duties had been waived on imports till August 18.
New and old cars of up to 1,000cc that were earlier exempted from the regulatory duty have been targeted with 100% duty, bringing total import taxes to 150%.
Vehicles that were earlier subject to 77% import taxes will now face taxes of 169% as the government has imposed 85% more regulatory duty and 7% additional customs duty.
Most expensive cars, both sports and high-engine capacity, have not been taxed heavily.
These categories of vehicles were earlier subject to total duties of 197% at the import stage. Now, the government has imposed 28% additional customs duty and only 10% additional regulatory duty.
Other decisions
The ECC approved Rs10 billion for the National Disaster Management Authority (NDMA) for the procurement of relief goods for flood victims with directives to the Finance Division to immediately release Rs5 billion, according to the finance ministry.
NDMA sought the funds for the procurement of 278,600 tents, 610,000 mosquito nets, 2,000 food packs and 50 de-watering pumps at a cumulative cost of Rs7.1 billion.
It has already procured 29,900 tents, 1.4 million mosquito nets, 82,400 food packs, 235 de-watering pumps and 12,000 water jerry cans at a cost of Rs2.4 billion.
However, the quantity and nature of procurements suggests that the NDMA was not ready to cope with any natural calamity, indicating its lack of preparedness for even small-scale disasters.
The ECC was informed that the NDMA had so far been allocated Rs8 billion for the procurement and logistics cost of relief items for the flood-hit people. It has already given orders for Rs9.5 billion worth of goods.
NDMA is also transporting the goods provided by international donors and has estimated the logistics cost at Rs5.3 billion, which also includes ground handling of flights, cargo ships and trains.
The ECC did not waive customs duty on the import of raw material of medicines, including paracetamol.
It directed the Ministry of National Health Services, Regulations and Coordination to withdraw the summary and submit a fresh summary on paracetamol to rationalise prices and ensure its availability.
The health ministry had proposed that 20% customs duty and 6% additional customs duty on the import of active pharmaceutical agents for the manufacturing of sulphamethoxzoie, pseudoephedrine and its salts, ephedrine and its salts, penicillins and their dericaties, cephalexin, cefixime in bulk, ciprofloxacin, norfloxacin, paracetamol and ibuprofen may be exempted.
Published in The Express Tribune, September 22nd, 2022.
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