Govt Planning a Huge Tax Increase on Imported CBU Cars
Posted by WALEED SHAH
The government has reportedly decided to drop its plans to ban the imports of Completely Built-Up (CBU) vehicles altogether and has proposed an increase of up to 50 percent Regulatory Duty (RD) on their imports. The step has been proposed to cork down the increasing import bill and current account deficit.
A senior official from the Ministry of Industries and Production (MoIP) told the media that it will submit proposals to the Tariff Policy Board (TPB) for approval. Once the TPB gives the MoIP a ‘go-ahead’, the policy draft shall be submitted before the Prime Minister for a final review and decision.
He clarified that:
Under the WTO regime, the country cannot ban imports. However, it can increase the tariffs on imports to reduce the import bill, so we have decided to increase the tariff on import of vehicles in the country. So much so, the increase in Federal Excise Duty (FED) up to 10 percent from the current 5 percent on vehicles being manufactured locally has also been proposed.
As per details, the concerned departments have recommended the enactment of 50 percent RD on the import of all CBU vehicles that qualify as ‘luxury vehicles’. The list includes:
- Electric Vehicles (EVs) with battery packs over 50 kWh
- Combustible fuel-powered CBU vehicles (No engine displacement specified)
- CBU vehicles with hybrid powertrains with an engine displacement between 1501cc and 1800cc
- SUVs with an engine displacement of 1501cc and above (a federal excise duty increase from 5 percent to 10 percent has also been proposed)
The document highlighted that these steps are intended to encourage local manufacturing of vehicles and to build an industry that enables exports rather than depending on imports.
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