ISLAMABAD, May 11: Businessmen have proposed to government the inclusion of zero per cent slab in the Pakistan Customs Tariff besides scaling down of maximum tariff to 20 per cent from 25 per cent in the upcoming budget for 2007-08, Dawn has learnt.
At present there are four slabs in the customs tariff — 25pc, 20pc, 10pc and five per cent. The government had reduced the maximum tariff on import duties from 125 per cent in 1990-91 to 80 per cent in 1993-94 and 65 per cent in 1995-96.
It was further reduced to 25 per cent in 2002-03, and the number of slabs had also been reduced to only four.
Well-placed sources told Dawn that the trade bodies and the ministry of textile industry had proposed to the government to slash the rate of duty to zero per cent on import of textile related machinery and raw materials in the upcoming budget. It would also attract new investment besides reducing cost of doing business.
The Indian government in the budget for the year 2007-08 has reduced the peak customs duty to 10 per cent from 12.5 per cent on industrial goods particularly on chemical and plastic goods it was even further reduced to 7.5 per cent.
The CBR had already floated the idea of reducing of maximum tariff to 20 per cent from 25 per cent two years back but the finance ministry and ministry of industry had objected to the proposal on the plea to protect the local industries.
An official source in the CBR told Dawn that it now seemed very difficult for the CBR to reduce maximum and minimum tariffs in the upcoming budget as it would result in major reduction in revenue realisation. The share of customs duty in overall revenue collection has already reached to the lowest level after the Federal Excise Duty (FED).
Out of 6,315 tariff lines, the government has levied a five per cent customs duty on 2,479 tariff lines and 25 per cent on 1,543 tariff lines. This means that any reduction in both minimum and maximum limit would mean greater revenue loss in the customs duty realisation, the official added.
A source in the commerce ministry told Dawn that some senior level officials were also pushing the proposal to reduce the maximum and minimum tariffs besides to do away with the condition of locally manufactured machinery will not be allowed for availing the concessions.
An analyst said apparently there was no urgent need for reducing the maximum tariff rates from 25 to 20 per cent and that too without a well-thought and planned tariff strategy. Arbitrary reduction in tariff rates primarily means allowing unintended market access to imported products.According to the official source that some anomalies still exist in the customs tariff, which would be done away with in 2007-08 budget.
At the same time, there were certain items on which the government was convinced that duty rate was still higher and should be reduced. The consultations were currently on among the commerce, finance and CBR officials to finalise the list of such items, the sources said.
Presently, it was observed that in a certain SROs exemption was allowed on certain raw materials or products for some specific purposes, which resulted into increasing of arbitrary and discretionary powers of the tax officials.
