The new government should not embark on repeating mistakes by allowing import of hybrid cars on zero duty rate as the scheme would only benefit a few and have a devastating impact on national exchequer, experts said on Friday.
Criticizing the advice to the federal government to allow duty-free import of hybrid cars to save on fuel bill, they said that the government would lose big time as the auto import bill would surpass the possible saving on fuel import bill as people with purchasing power would import heavy luxury vehicles running on hybrid technology, corporate tax lawyer Intezar Mahdi viewed. The previous such initiatives taken by PPP regime, specially tax amnesty on smuggled or illegally imported vehicles, only proved hollowness of the tax and revenue systems instead of bringing any long term benefits.
The country had lost 15 billion rupees in amnesty scandal as if those 51,000 vehicles were assembled in the country, regular taxes/revenues on an average would have crossed Rs 25 billion while amnesty scheme only added Rs 10 billion to the national kitty.
“Such short term approaches always provide multimillion dollar benefit to some segments who originate such schemes leaving a depressing impact on honest taxpayers and law abiding citizens,” the expert claimed.
He said that instead of allowing concessions on import of CBU, the government should emphasize on transfer of hybrid technology to generate investment and job opportunities in the country.
“While it is a fact that hybrids will cost Rs 4-6 /KM cheaper than regular fuel cars but the most economical hybrid vehicle costs around $20,000. Imagine our oil import bill going down by just Rs 1 billion and vehicle import bill going up by Rs 10 billion on a meager import of 5,000 units. It would be a disaster for our balance of payments,” he said.
“On top of that, policy makers are deliberating to reduce duty/taxes on 1,800cc HEVs to make it easier for the elites of this poor country to import super luxury hybrid vehicles who could otherwise afford the cars run on fuel as well,” he added.
“The proposed duty free import of hybrid vehicles will not only create balance of payment issue but will also eliminate the local engineering base (vending industry) as CBU import will completely wipe out the need of local parts for assembling these vehicles while the hybrid will most likely take away a major chunk of market share,” he added.
Policy makers seem to be delusional about the fuel savings part and very conveniently ignoring the impact on import bill of importing expensive CBU vehicles while our weak currency might not be able to sustain the influx of luxury hybrid vehicles.
In this condition, such policies are not wise and will have a long term devastating impact on country’s economy.
The severity of situation can be gauged from the fact that mafias in used cars business have already started buying and stocking used hybrid vehicles in Japan, whereas the Government has not clarified its intentions whether it will allow used hybrid or new hybrid. “Hybrids do save fuel by up to 40% or more but one has to see the overall picture while working on such policy issues and must thoroughly scrutinize both sides of the coin,” said an expert.