US wants tax exemption on import of security scanners

Scanners are to be installed at Karachi port to inspect US-bound export containers

ISLAMABAD:

The United States has requested Pakistan to exempt from duties and taxes the import of security scanners that it wants to install at Karachi port for scanning US-bound export containers under its Container Security Initiative (CSI).

The Economic Coordination Committee (ECC) of the cabinet will take up the US request of granting it exemption from payment of $3 million or about Rs317 million in taxes and duties next week. Washington has claimed exemption under a bilateral agreement, said an official of Federal Board of Revenue (FBR).



The federal government has withdrawn FBR’s powers to give tax exemptions under a condition of the $6.2 billion International Monetary Fund loan programme. However, in certain cases, these powers now rest with the ECC.

In 2007, the US had installed scanners at Port Qasim Karachi under its CSI that it had launched after September 2001 terrorist attacks aimed at addressing the threat to its security.

The CSI proposes a security regime to ensure all containers that pose a potential risk for terrorism are identified and inspected at foreign ports before they are placed on vessels destined for the US, according to the US Custom and Border Protection. The US has stationed its teams in foreign locations to detect threats offshore.



“Under a bilateral arrangement, the US has approached Pakistani authorities with a request to exempt the taxes on installation of new non-intrusive scanners that will be installed at Port Bin Qasim”, said FBR spokesman Dr Mohammad Iqbal. He said the US wanted to replace the old scanners with new ones.

Dr Iqbal said being signatory of Declaration of Principle, the FBR has sent a summary for a decision to the ECC.

The ECC will also take a decision on a proposal to levy 40% regulatory duties on import of maize aimed at blocking imports of cheap commodity due to falling international prices. The Ministry of National Food Security and Research has requested the ECC to impose the levy.



In its summary, the ministry said that according to the UN Food and Agriculture Organisation, the prices of food grains have come down almost 40% since their peak in 2011. Because of the higher cost of inputs, the prices of these food grains in the domestic market are still higher. The price of maize in the domestic market is Rs23,100 per metric tons or 29.4% higher than Rs17,850 per metric tons maize prices in the international market.

The ministry said that the difference between the prices can lure the importers to import maize from abroad, which would undermine the domestic agriculture.

The farmers are already feeling the brunt of falling commodity prices in the international market and the government has recently announced Rs341 billion package for them. However, the parliamentarians have described the package “deceptive and illusionary”. The government has made components like bank credit, which will not have any financial implications for the government, part of the package.

Out of Rs341 billion, an amount of Rs100 billion has been added on account of bank credit, which the banks will recover from the farmers.



The ECC will also take a decision on setting minimum wheat support price for the 2015-16 crop. The Ministry of Food and Agriculture has proposed to retain the price at Rs1,300 per 40 kg due to surplus stocks and falling prices in the international market.

The Federal Committee on Agriculture has already unanimously decided that the wheat support price should be retained at Rs1300 per 40 kg for 2015-16 season crop. The committee had also reviewed import export parity.

According to estimates of International Grain Council, the world wheat production would rise to 721 million tons in 2015 from 655 million tons. The world wheat stocks are also projected to increase to 201 million tons from the last year level of 170 million tons.

Published in The Express Tribune, November 28^th,  2015.

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