ISLAMABAD: Commerce Division has shown a rare displeasure over the Revenue Division for not considering reduction across all 481 tariff lines in the budget 2018-19 to enhance export competitiveness and productivity of the domestic industries.

The Federal Board of Revenue (FBR) has only considered 104 tariff lines – mostly raw materials – by withdrawing the customs duty while reduced duty on other 28 tariff lines. The rest of the tariff lines were dropped, which trigger resistance from the Commerce Division.

Showing annoyance, the Commerce Division has sent a formal letter to FBR by highlighting that all tariff proposals announced in the budget 2018-19 are in violation of rules of business and are not transparent.

The letter received in the FBR’s Customs Department and seen by Dawn has urged the board to withdraw all tariff-related proposals on the plea that it was not the mandate of customs department under the rules of business. “In future, any proposals related to tariff should be routed through the Ministry of Commerce,” the letter said.

The act of initiating new tariff proposals and the refusal/hesitation to share them with Commerce Division and National Tariff Commission (NTC) by the Revenue Division amount to infringement of the latter’s mandate in violation of the rules of business.

It further says the “unauthorised exercise of veto by FBR on the recommendations of NTC is contravention of transparency in matters of public policy, and creation of tariff distortions within the value chains of sectors”.

A formal request was made in the letter to withdraw all such proposals that have been submitted without consultation of Commerce Division in contravention of the rules of business and route all such proposals in future through the division, which is mandated to formulate and implement the tariff policy.

When contacted, a senior customs officer told Dawn that it was the mandate of the FBR to make changes in the tariff. He said no violation was made while making changes in tariff unilaterally without the involvement of the Commerce Division. He said NTC, a subsidiary department of the Commerce Division, has only the power of tariff protection. He added the division will be informed about these powers.

But contrary to this, the FBR has imposed regulatory duties on few hundred products in the past few days to curtail its flows and provide protection to domestic industries.

According to the letter, the tariff policy and its implementation are assigned to the Commerce Division. The Revenue Division has exclusive mandate in tax policy making and has nothing to do with tariff.

It was mentioned that NTC is the specialised agency which is supposed to do working on tariffs under NTC Act 2013 and make any recommendations after examining certain factors and submit a report to federal government, which mean federal cabinet.

The pick and choose by FBR of some of the recommendations and rejecting the others make a lack of transparency by FBR, the letter noted. “How come a specialised agency — NTC — can make recommendations in 10 tariff lines on a certain sector, while FBR picks three and rejects seven others,” the letter questioned.

Published in Dawn, May 13th, 2018