Pakistan Automobile Sector Wants Government to Slash Taxes!
One industry suffering due to COVID-19 in Pakistan is the Automobile Sector, which wants the government to slash taxes in the Finance Bill 2020.
Due to the spread of COVID-19, many industries have been struggling to achieve their goals and operate their day-to-day businesses like before. One such industry in Pakistan is the Automobile Sector, which wants the government to slash taxes in the Finance Bill 2020.
Pakistan Association of Automotive Parts and Accessories Manufacturers’ (PAAPAM) former chairman Mashood Ali Khan stated, “The decline in the country’s automobile sector began in July last year when the government announced that non-filers of tax return can register only one vehicle against their CNIC.
“After that, we were burdened with additional customs duty of 7-11% and federal excise duty of up to 7.5%.”
In 2019, the Pakistani rupee was very volatile; in September and October, the rupee depreciated greatly against the dollar, and that did not impact the automobile industry positively. Former Chairman Khan indicated that the sector had hoped that 2020 would be the year of revival – looking at the data from January and February 2020, it seemed possible even if the numbers were lower from those in January and February of 2019.
“Then, we pinned our hopes on new vehicle models but the coronavirus outbreak resulted in zero car sales in April 2020,” Mashood Ali Khan said.
In the past few years, the production has fallen instead of rising. A few years ago, Pakistani manufacturers made around 250,000 cars in a year and aimed to hit the 500,000 mark.
However, the data of this fiscal year and previous fiscal year show that we haven’t even crossed the 200,000 mark. In the current fiscal year, 89,284 cars have been manufactured so far. The previous year’s data shows that 196,415 cars had been produced then.
It seems that the 18% sales tax that has been imposed on the cars is not motivating people to buy cars. According to Khan, “if the government cuts it [sales tax] down to single digit, it will give a boost to the entire automobile sector and enhance government earnings as well.”
Currently, the Automobile sector is contributing around 2.8% of the gross domestic product (GDP). The sector reportedly adds Rs 30 billion to the national exchequer in the form of taxes and duties, as it is considered the 3rd largest taxpayer in the country (after oil and gas industry and telecommunication sector).
Mashood Ali Khan added,“Executives from other industries like textile and food used to buy cars, however, they have discontinued purchases since all sectors have been hit by COVID-19 and there is virtually no demand.
“The automobile industry of many countries is suffering, including India, but their government is giving incentives while our government is not.”
What do you think? Should the Pakistani government listen to the automobile industry about slashing taxes? Let us know in the comments!
About Us:
Runway Pakistan is a complete solution provider for all your marketing communications related requirements. The ultimate hub of infotainment – Runway composes of all the key offerings – Monthly Print Magazine, Digital Magazine, Media Production, Creative Agency, PR Agency and Marketing Consultancy that a brand needs to be seen, heard and known!
Like and follow our Facebook page:
