On Monday the federal cabinet approved the imposition of up to 100% regulatory duty on nearly 800 tariff lines for a period of six months that will have very little impact on the import bill as the duties will hit hardly 1.5% of last year’s import payments.
The government has selected mobile phones, new and used cars, home appliances, meat, fish, fruits, vegetables, footwear, furniture, and musical instruments by levying the regulatory duty.
In addition, customs duty of up to 28% has also been imposed on cars. Their import has now been allowed on payment of higher taxes.
A summary of the federal cabinet showed that the government imposed the duty at even less than the permissible limits under the international treaties, indicating divisions within its camps. Prime Minister Shehbaz Sharif wanted to impose a 1,000% regulatory duty while Finance Minister Miftah Ismail announced a levy of up to 600% additional regulatory duty.
The federal cabinet’s decision, which was secured through the circulation of the summary, showed that the duty was in fact imposed in the range of 10% to 100%, covering only $1.2 billion worth of imports last fiscal year.
The cabinet approved the imposition of regulatory duty and an increase in additional customs duty for only six months with the exception that the duties on electric cars would be applicable for only three months.
The cabinet also agreed that the held-up consignments of vehicles, mobile phones, and home appliances till August 18 should be released on payment of a 100% penalty.
A day earlier, the Tariff Policy Board approved the imposition of these duties, which was chaired by Commerce Minister Syed Naveed Qamar.
The duties have been imposed to restrict imports, which shot up to a record $80 billion in the previous fiscal year. At the weekend, the government lifted the ban on imports after it could not sustain pressure from the European Union and the International Monetary Fund (IMF).
The duties have been imposed on 792 tariff lines, covering only $1.2 billion of the import bill. The Ministry of Commerce has estimated that the duties may curtail imports by 60% to 70%, translating into hardly $720 million to $840 million.
Raw materials and industrial inputs will remain exempted from these duties.
Miftah Ismail told the media that he was going to impose up to 600% duties and taxes on cars, making it impossible to import vehicles.
During the Tariff Policy Board meeting, which recommended these rates, Board Chairman Syed Naveed Qamar expressed concern over the phenomenal proposed increase in import duties on meat and other products due to possible retaliation by the US and other trade partners.
The National Tariff Commission voiced concern over the negligible impact of the proposed duties on the import bill, which may explode again this year after lifting the ban and targeting only 1.5% of the total imports last year.
The government has targeted 49 tariff lines of vehicles having just $315 million import value. It has imposed 10% to 100% regulatory duty and 7% to 28% additional customs duty on cars, showed the details.
Up to 1,000cc new and old cars that were earlier exempted from the regulatory duty have been targeted with 100% duty, bringing total import taxes to 150%.
Vehicles that were earlier subject to 77% import taxes will now have to pay a total of 169% in taxes as the government has imposed 85% more regulatory duty and 7% additional customs duty.
The most expensive cars, both sports and high-engine capacity, have not been heavily taxed.
These categories of vehicles were earlier subject to 197% of total duties at the import stage. Now, the government has imposed 28% additional customs duty and only 10% additional regulatory duty.