Suggestions: PAMA commends budget proposals, wants more

Urges increase in duties on import of used cars.

KARACHI: The Pakistan Automotive Manufacturers Association (PAMA) appreciated a fair and equitable federal budget announcement and commended efforts to broaden the tax net.

However, they did express a reservation.

While appreciating the decision to reduce the sales tax on tractors to 10% and abolish the Federal Excise Duty (FED) on vehicles above 1,800cc, the association said the change is nominal compared to the increase in car prices on account of rupee-yen and rupee-dollar parity.

“We commend the efforts of the finance minister to broaden the tax base and provide a level playing field as these initiatives are likely to spur economic growth,” said a PAMA release.

“We welcome the finance minister’s decision to reduce the sales tax on tractors and abolish the FED on vehicles above 1,800cc. These decisions will boost sales and help increase the revenue on account of higher volume,” the release added.

However, the extent of this increase is nominal compared to the increase in price of cars on account of changes in US dollar and Japanese yen exchange rate parity.

While this measure will help increase production volume of local cars and capacity utilisation of the plants, PAMA urged the duty structure on used imported cars to be reviewed again and duties increased equitably, a spokesman added.

“Our other concern is the sales tax paid on services and indirect material or supplies not being allowed against taxable goods. We hope this anomaly is addressed so as not to increase the cost of doing business of our members who are all honest taxpayers,” the PAMA representative said.

“We believe the positive taxation measures proposed in the budget will result in overall increase in volume of domestic production in the automotive industry, leading to increased employment, additional revenue to the government and in general boost the economic activity in the country.”

Published in The Express Tribune, June 10^th, 2014.

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