affanpervez
Minister (2k+ posts)
GOVT TO INCUR LOSSES WORTH $6 BILLION’
Mansoor Ahmad
LAHORE : The government’s plans to allow duty-free import of hybrid cars have come under the microscope after a study revealed that the government would incur a cumulative loss worth over $6 billion in the next five years if it goes ahead with the move.
The import bill of fuel would be reduced by only $357 million in the next five years on the yearly import of 25,000 hybrid vehicles while the additional cost on the imports of these cars would be over $2.1 billion, revealed a detailed analysis jointly conducted by the Pakistan Automotive Manufacturers Association and Pakistan Association of Auto Parts and Accessories Manufacturers Association.
The study revealed that the government measure to allow duty-free import of hybrid cars would increase the import bill of the country instead of reducing it. Moreover, if 25,000 hybrids are imported annually the total burden on the exchequer in five years would be over $6 billion.
The two associations based their calculations on the assumption that 20,000 standard hybrid cars of 13000cc or little above would be imported yearly in the country, while 5,000 high-end luxury hybrid models would also be included in the duty free imports of hybrid cars.
The analysis revealed that the average cost of import price of non-hybrid vehicles is $6,962, standard hybrids at $20,000 and luxury hybrid models around $100,000 each. The CBU/CKD duty on hybrids is zero while on non-hybrid vehicles is 32.5 percent. There is also no sales tax or withholding tax on hybrids while the standard cars are charged 16 percent GST and 3.5 percent withholding tax.
The fuel consumption of standard non-hybrid vehicles is 11km per litre and 28 km per litre for hybrids, the study revealed, adding that hybrids operate in cities only as they run on normal high fuel consumption on highways. The average yearly running of a car in cities is 25,000 km. The PAMA/PAAPAM analysis revealed that if 25,000 hybrids are imported the saving on fuel import would be $23.82 million but the increase in import bill because of hybrids would be $423.33 million. The government would lose duty worth $551.40 million due to the zero-rated duty on hybrid cars. The government would also lose petroleum levy to the tune of $8.25 million. In addition, the government would also suffer a tax revenue loss of $272 million as no withholding tax would be collected on the duty and sales tax paid value of hybrid vehicles because they are zero-rated. The analysis pointed out that the government would suffer a cumulative loss of $1.23 billion per year; and the cumulative loss in five years would be over $6 billion.
The two apex auto sector associations pointed out that since hybrid batteries do not operate on highways therefore hybrid cars would operate on petrol on highways. The hybrid batteries they further informed have special disposal procedures as they are environmentally hazardous.
The two automotive associations recommended the government to focus on the transfer of hybrid technology for local manufacturing by existing players and new entrants to generate investment and job opportunities in the country.
They also suggested that the government encourage the local assembly of hybrid vehicles by allowing import of specific hybrid parts (lithium battery) at zero percent duty, similar to the practice in other countries such as Thailand , Malaysia etc. Further, they pointed out that there would hardly be any imports if normal duties and taxes are applied on hybrid cars.
http://www.thenews.com.pk/Todays-News-3-196741-Govt-to-incur-losses-worth-$6-billion
Mansoor Ahmad
LAHORE : The government’s plans to allow duty-free import of hybrid cars have come under the microscope after a study revealed that the government would incur a cumulative loss worth over $6 billion in the next five years if it goes ahead with the move.
The import bill of fuel would be reduced by only $357 million in the next five years on the yearly import of 25,000 hybrid vehicles while the additional cost on the imports of these cars would be over $2.1 billion, revealed a detailed analysis jointly conducted by the Pakistan Automotive Manufacturers Association and Pakistan Association of Auto Parts and Accessories Manufacturers Association.
The study revealed that the government measure to allow duty-free import of hybrid cars would increase the import bill of the country instead of reducing it. Moreover, if 25,000 hybrids are imported annually the total burden on the exchequer in five years would be over $6 billion.
The two associations based their calculations on the assumption that 20,000 standard hybrid cars of 13000cc or little above would be imported yearly in the country, while 5,000 high-end luxury hybrid models would also be included in the duty free imports of hybrid cars.
The analysis revealed that the average cost of import price of non-hybrid vehicles is $6,962, standard hybrids at $20,000 and luxury hybrid models around $100,000 each. The CBU/CKD duty on hybrids is zero while on non-hybrid vehicles is 32.5 percent. There is also no sales tax or withholding tax on hybrids while the standard cars are charged 16 percent GST and 3.5 percent withholding tax.
The fuel consumption of standard non-hybrid vehicles is 11km per litre and 28 km per litre for hybrids, the study revealed, adding that hybrids operate in cities only as they run on normal high fuel consumption on highways. The average yearly running of a car in cities is 25,000 km. The PAMA/PAAPAM analysis revealed that if 25,000 hybrids are imported the saving on fuel import would be $23.82 million but the increase in import bill because of hybrids would be $423.33 million. The government would lose duty worth $551.40 million due to the zero-rated duty on hybrid cars. The government would also lose petroleum levy to the tune of $8.25 million. In addition, the government would also suffer a tax revenue loss of $272 million as no withholding tax would be collected on the duty and sales tax paid value of hybrid vehicles because they are zero-rated. The analysis pointed out that the government would suffer a cumulative loss of $1.23 billion per year; and the cumulative loss in five years would be over $6 billion.
The two apex auto sector associations pointed out that since hybrid batteries do not operate on highways therefore hybrid cars would operate on petrol on highways. The hybrid batteries they further informed have special disposal procedures as they are environmentally hazardous.
The two automotive associations recommended the government to focus on the transfer of hybrid technology for local manufacturing by existing players and new entrants to generate investment and job opportunities in the country.
They also suggested that the government encourage the local assembly of hybrid vehicles by allowing import of specific hybrid parts (lithium battery) at zero percent duty, similar to the practice in other countries such as Thailand , Malaysia etc. Further, they pointed out that there would hardly be any imports if normal duties and taxes are applied on hybrid cars.
http://www.thenews.com.pk/Todays-News-3-196741-Govt-to-incur-losses-worth-$6-billion
Last edited by a moderator:
