President Asif Ali Zardari should order immediate stoppage of the illegal trading of used cars by local dealers which is not only damaging the reputation of the country eating up its revenue resources and destroying the billion dollar industry and livelihood of thousands of skilled workers, said Iqbal Hussain Shah, Vice Chairman Pakistan Automobile Manufacturers Assemblers Dealers Association (PAMADA) in a statement here Thursday.
Iqbal Shah said that dealers of the used cars have turned the policy for overseas Pakistani into commercial import policy, which is the first violation of the laws and paving the way towards corruption in the government departments.
Firstly, the facility meant for those, who have given their sweat and blood to earn foreign exchange for the country, is abused by the trader mafia giving them peanuts in return besides promoting corruption at different levels by illegally importing more than the allowed age of used cars. He said this is evident from the fact that more than 65,000 cars were imported from Japan in FY 2011-12, whereas estimated Pakistani population in Japan is around 10-15,000.
Secondly, the statement said that nowhere in the region used car import is allowed, not even in the bigger economies like India and Thailand.
Therefore, the Govt should only allow brand new cars so that the competition remains on level playing field. The trader mafia opposes this move knowing that local auto industry is producing cheaper cars than anywhere in the region and that is exactly why they are afraid of piling up stocks of new cars as the consumers will easily choose locally made cars because of the huge price difference.
Moreover, he added, the trader mafia is still importing 5 years old cars although the age limit of used cars had been reduced to 3 years by the government in November last year. VC PAMADA said that customs authorities have clear knowledge of this fact but have turned a blind eye towards the situation for reasons best known to them.
He said that during last 7 years, international car prices have been jacked up due to currency depreciation but the used car dealers are not passing any benefit to consumer while huge 60% depreciation allowance that eases down imported cars’ prices has not benefited the consumer either.
“If the same rebate is given to local car industry, the consumers can have cheaper brand new ‘Made in Pakistan’ cars with warranty and availability of quality spare parts at comparably lower rates,” he added.
He said that according to the law, the Import Tariff Prices (ITP) rate should be set as per the prices of new model of any car and then rebate in terms of depreciation is given, while the same is being done as per car prices of 2005. The benefit again is siphoned off by dealers and both the overseas Pakistani whose papers were used and poor buyer of the car are both deprived of these benefits.
He said that very cleverly the dealers have been trumpeting about price increase of locally made cars but they themselves have increased prices of imported junk several times without any value addition that could justify the price increase due to rupee depreciation.
He said that if ITP is calculated properly as per the current prices of new car and then giving 60% allowance for depreciation, duties and taxes on Daihatsu Mira (800 cc) should be $4994 whereas the government is collecting only $1760 on the same due to tariff anomalies as the importers misquote the car prices. Similarly, for Toyota Vitz (801-1000c) the duties and taxes should be $6,686 on used vehicle but only $2,200 ae being added to the national kitty, making the government incur the loss of $4,486 on one unit.
Iqbal was of the opinion that the government can double its revenue if the custom tariffs are updated because years old Import Trade Prices (ITPs) already denied the government its due share in the segment of imported cars. ‘The government has lost billion of rupees on the import of used cars in last 18 months by dint of anomalies in duty structure,’ he added.
The local automobile industry generates Rs 65 billion revenue for the government in terms of taxes and duties whereas the imported cars contribute merely Rs 21 billion per year with massive tax evasion, Shah said.
