Pakistan Auto Manufacturers Authorized Dealers Association (PAMDA) Vice Chairman Iqbal Hussain Shah lamented the decision of the Federal Board of Revenue (FBR) to regularise non-duty paid smuggled vehicles under a new amnesty scheme.
The move, he said, would deepen the crises of local auto industry while giving a cover to illegal businesses at the same time.
“It is very sad that the government is patronising illegal trade to benefit a few and to demolish the local auto industry with which thousands of people are associated. This is beyond any comprehension,” he said.
The FBR on Tuesday issued SRO 172(1)/2013 stating that the federal government is “pleased” to direct that smuggled or non-duty paid motor vehicles, having non-tempered engine or chassis numbers, which have been seized or voluntarily presented to Customs on or before the 31st March 2013 shall be allowed release on payment of redemption fine along with duty and taxes.
The deplorable thing, Shah added, was that the scheme would also be applicable on vehicles, having an age beyond 5 years, which is a clear attempt to jeopardize the local auto industry. “It is strange that the government is taking such steps instead of supporting local industries. They are out to destabilize the investment of billions of rupees,” he added.
He further said the scheme is meant to help the influential of the country who are involved in smuggling and doing a great deal of damage to the economy. “A media report citing the Customs intelligence said the scheme is to benefit 2.3 million non-duty paid smuggled vehicles. This will immensely the local car industry of the country,” said Shah.
This scheme has allowed 60 to 70% depreciation in value of used cars for assessment of duty in case of five-year-old used cars, while in case of those older than five years, five percent real depreciation in value per year for assessment of duty is allowed. Similarly, more than 14-year-old cars would be made subject to a flat rate of Rs 50,000 to Rs 100,000 depending on their make-up, while only one percent redemption fine would be imposed on used cars.
“At present the government allows import of only three-year-old used cars. However, the amnesty for smuggled vehicles has no age limit and can be used for legalisation of any car smuggled into the country through illegal routes. Who is going to save the local auto industry from this blatant damage?” Shah remarked.
“For example, with a minimum cap of $500 on 1800cc and below cars and $1000 for above 1800cc cars, a land cruiser of 1998 or 2000 model would just pay $1000 to get the status of an officially duty-paid vehicle. This advantage would only be for a particular class–which have bought smuggled used cars in the past few years and not paid any duty and were using fake number plates,” said the PAMDA official.
He said a similar sort of amnesty scheme was given to ambulances which are nowadays used as commercial vehicles. “The biggest threat is Afghan Transit Trade as those vehicles can now easily be given official status at extremely low duty rates,” he added.
Shah said it was an irrational estimation which stated that the amnesty scheme would yield Rs 8 to10 billion for the national exchequer, adding that the government ignored the fact that the local auto industry paid more than this amount, only in of taxes. “They are going to make themselves content on a small share of revenue through smuggled and illegal used cars at the cost of huge revenue they receive from the local auto industry,” he said.
Shah said it was beyond comprehension why the government had taken another unpopular decision ahead of general elections and at a time when they were being criticised for their anti-investment policies in their five-year tenure. “It seems the decision makers have lost interest in making the country an investment-friendly nation,” he added.
This is the second amnesty scheme announced by the PPP-led coalition government. Last year, the government gave amnesty to those who wanted to whiten their black money by making investment in the stock market.
Since then, Shah said, the government had miserably failed to stop vehicles being smuggled into the country. They are launching such schemes at the expense of local industries which reflected short-sightedness of policy makers. “This amnesty scheme for smuggled vehicles has shown the world that the government itself is encouraging unlawful activities,” he concluded.
Local auto-dealers slam FBR for amnesty to vehicle-smugglers
