Govt to abolish excise duty on cars

[Naveed Yaseen]

Automakers demand bailout, make no commitment of price cut
By Aftab Maken
ISLAMABAD: The government will abolish five per cent federal excise duty on sale of locally manufactured automobiles to help the industry improve its sales, an official of the Ministry of Finance said on Thursday referring to a meeting held the other day to review soaring prices of cars.

However the demand of Original Equipment Manufacturers (OEMs) for also slashing the sales tax from 16 per cent to 12 per cent was not accepted, said an official attending the meeting chaired by Federal Minister For Production & Industries Manzoor Ahmed Wattoo.

The representatives of the OEMs also disclosed to the minister that Advisor to PM on Finance, Shaukat Tarin has principally agreed to abolish five per cent FED on car sales, the same official quoted a senior executive of leading auto-manufacturer as saying.

The Finance Bill 2008-09 released by the Federal Board of Revenue (CBR) has levied FED at the rate of five per cent on import as well as locally manufactured cars having engine capacity exceeding 850cc.

The OEMs did not give any kind of hint of reducing auto prices but requested the Minister Of Industries & Production to help the industry by abolishing the tax collected on the sale of cars, another participant of the meeting told The News.

They also assured the government that the OEMs demand of abolishing five per cent FED and slashing sales tax from 16 per cent to 12 per cent would help the industry to reduce the auto prices by Rs100,000 per unit, said the same official.

However, the auto-makers did not make any commitment with the minister of industry & production for reducing the auto prices by lowering their profits and only asked the ministry to get the industry out of crisis by abandoning the taxes on auto sale, he added.

Automobiles sales in the first ten months of the current fiscal year registered a decline of 46 per cent while all the auto brands increased their prices from Rs150,000 to Rs300,000 per unit in the past months.

Engineering Development Board (EDB), an attached department of Ministry Of Industries & Production, has recently and in the past issued studies on the actual cost of production of autos in Pakistan.

http://www.thenews.com.pk/daily_detail.asp?id=178913