Heavy regulations on luxury items on cards
ISLAMABAD: The government is considering various options to increase regulatory duties (RD) on the import of dozens of luxury items such as the import of automobiles, cosmetics, master baths, varnish, stationery, various textile products, sweeteners, non-essential foods. , and others.
The government decided to go ahead with fiscal measures to reduce the growing current account deficit which had already swelled to $ 2.3 billion in the first two months (July and August) of the fiscal year. 2021-2022.
“All relevant ministries are preparing lists of imported luxury items on which the regulatory duty rate will be significantly increased in order to reduce the increase in the import bill,” senior official sources confirmed to The News on Friday.
The Tariff Policy Council is scheduled to meet next week, and after deliberating and making decisions at the next Council meeting, a summary will be offered for approval from the ECC and Cabinet.
The Ministry of Industry and Production has proposed to impose a regulatory duty of 50 percent on the import of electric vehicles (EVs) with more than 50 kWh of batteries. Due to a reduction in tariffs on electric vehicles in fully built unit (CBU) state by 25-10%, the import of high electric vehicles and electric vehicles may lead to an increase in the current account deficit .
The aim of the electric vehicle policy is to promote local manufacturing while the import of high-end electric vehicles has increased due to the reduction in tariffs. Such measures will discourage the importation of high-end vehicles and electric vehicles under CBU conditions.
There is another proposal to increase R&D on Hybrid Vehicles (CBUs) from 15 percent to 50 percent on 1501cc to 1800cc. This intervention will discourage the importation of vehicles in CBU conditions and improve the current account deficit.
The regulatory duty on the import of CBU (normal gasoline vehicle) should be increased from 15 to 50 percent. There is another proposal to increase the Federal Excise Tax (FED) on locally manufactured cars / SUVs of 1501cc and above to 10% from the current FED rate of 5%.
The DEF on cars / SUVs from 1501cc to 1800cc is also expected to drop from 5% to 10%. In some proposals, textile-related products are also being considered to make adjustments in RDs and CDs.
The State Bank of Pakistan has forecast a current account deficit in the range of 2-3 percent of GDP, equivalent to $ 6-9 billion for the current fiscal year; however, independent economists feared it could climb to $ 10 billion to $ 12 billion until the end of June 2022.
The SBP, meanwhile, issued new regulations, requiring banks to declare $ 500,000 and more of their future foreign exchange requirements for overseas purchases, apparently in an effort to strengthen monitoring of cash flows and to make the rupee less volatile.
The SBP has issued new guidelines requiring banks to submit information relating to all their upcoming import payments of $ 500,000 and over for the next five days. Meanwhile, the pak rupee (PKR) ended almost stable against the dollar in the interbank market on Friday and brokers said the local unit will remain stable for the next few days.
The rupee closed at 169.08 per dollar, from Thursday’s close of 169.03. In the open market, the rupee ended at 170 to the dollar. He finished at 169.80 in the previous session.