Auto makers call for tariff cuts – Journal
ISLAMABAD: The auto industry on Monday urged the government to reduce tariffs on raw materials and parts in the next budget so that the prices of locally manufactured and assembled vehicles can be reduced and production increased.
In its budget proposals forwarded to the relevant ministries, the Pakistan Automobile Manufacturers Association (Pama) suggested that the government change the tax structure on raw materials and parts to reduce the cost of vehicles. Pama added that manufacturers were no longer able to absorb the unprecedented surge in commodity prices around the world.
According to the association, most automobiles today are made of 57% steel, 7% iron, 8% plastic and 8% aluminum, while other materials made up the remaining 20%.
“The prices of all of these materials have been rising steadily this year and it has become really difficult for automakers around the world to absorb the impact. Therefore, manufacturers are forced to increase the prices of their manufactured cars, ”added Pama.
According to the association, in the steel industry, the price per ton of electrogalvanized coil, cold rolled coil and hot rolled coil increased by 118pc, 119pc and 161pc, respectively, compared to the rates registered in September 2020.
Likewise, the price of copper per pound was recorded at $ 2.95 in September 2020, but the same price was $ 4.66 in May 2021 – a jump of 58 pc. In addition, the price of aluminum per tonne increased by 45 pc during the same period, added Pama.
In view of the rising prices of raw materials, the automotive industry suggested that the government modify SRO 1178 (I) 2015 which concerns the additional customs duty (ACD) levied on various items, including raw materials to 1 pc, which has been further upgraded to 2 pc. vide SRO 630 (I) / 2018. As part of the Automotive Development Policy 2016 (ADP), a customs tariff roadmap on imports of CKD components, subcomponents has been outlined. Therefore, says Pama, improving the ACD is not in line with the ADP. In addition, the tax on ACD has severely affected the competitiveness of the local auto industry.
According to the association, the government has increased unit taxes on the auto industry by levying FED and ACD on auto industry inputs. The government’s goal was to generate more income by increasing different tax rates.
PAMA also suggests that the government allow all direct consumable materials under SRO656, including oils, lubricants, greases, etc.
Posted in Dawn on May 18, 2021