After learning that the regulatory duties have stifled the manufacturing sector and have caused unprecedented inflationary pressure, the government is likely to announce their abolition and lower the customs tariff to 25 percent in the next fiscal year’s federal budget.
An official source said the government was also likely to lift the ban on the export of commodities such as pulses in the next fiscal year, as their export to international markets would provide an opportunity for growth in domestic production.
The finished cascading tariff would also be eliminated and importers could benefit from discounted duties like industrialists, said the source, and the government would announce measures to promote trade with neighbouring countries.
These decisions have been made for the next fiscal year’s budget to revive the manufacturing sector and control the unprecedented inflation. The decisions were taken after it was pointed out that the current maximum customs tariff of 35 percent was higher than that of neighbouring countries.
It was further subject to 17 percent general sales tax and then there was no justification in imposing the regulatory duties ranging between 15 to 35 percent and special excise duty of two percent.
It was decided that regulatory duties were stifling and they should be discontinued, and that the customs tariff would be initially lowered to 25 percent but subsequently reduced to 10 percent in the next few years. A decision on excise duty was deferred, the source said.
The imposition of regulatory duties was made on a total of 397 items in early 2009 because of a balance of payment crisis. Out of these, 204 items were basic food items such as milk, fish and fruits.
The high custom duties, regulatory duties and general sales tax made their formal import unviable. Since the country lacked these food products, the consumers had to pay more to get these products, causing inflation. Currently, basic food products such as yogurt, butter, apples, guavas, citrus fruit, nuts, sausages, sardines, salmon, herrings, shrimps and prawns have a combined duty of over 50 percent on their import. The government had also decided to facilitate trade with the neighbouring countries, and a few measures such as fewer restrictions on imports would be announced in the budget, but the implementation steps would be announced in the next fiscal year’s trade policy, the source said.
Stifling regulatory duties to be abolished in next budget
