ISLAMABAD, Aug 27: In a move aimed at reducing the current account deficit, the government on Wednesday imposed 15 to 50 per cent additional customs duty on import of 350 luxury items and consumer goods.

The decision was taken by the federal cabinet at a meeting of presided over by Prime Minister Syed Yousuf Raza Gilani.

The decision is expected to reign in the rising import bill on account of import of luxury items whose value ranged between $1.2 billion and $1.7 billion a year, a senior official told Dawn after the meeting.

To reduce the import of these items, the government also increased the cash margin on opening letters of credit to 100 per cent.

The fast expanding fiscal and current account deficit has brought the rupee under tremendous pressure and pushed up inflation beyond a tolerable level.

An additional 15 per cent customs duty has been imposed on more than 300 items, including dairy products, fruit, chewing gum, chocolate, processed food, fruit juices, aerated waters, washing machines, plasma TV, ceramic products, air-conditioners, refrigerators, electric fans, toasters, microwave ovens, television sets, furniture and lighting equipment.

The duty on these items had been increased from 25 per cent to 35 per cent in the 2008-09 budget and the accumulative duty now stands at 50 per cent.

The government levied 20 per cent additional customs duty on more than 30 items, including electric ovens and cooking ranges. The duty on the items had been raised from 20 per cent to 30 per cent in the budget. The total duty will now be 50 per cent.

The additional customs duty on new petrol vehicles of 1800cc and above has been raised by 50 per cent and that of diesel vehicles of 2500cc and above by 50 per cent.

The government in the last budget had increased the duty on import of cars and jeeps above 1800cc from 90 per cent to 100 per cent and increased the fixed duty/tax rates on old and used cars and jeeps by 10 per cent.

An additional duty of Rs250 has been imposed on new mobile phones, besides 30 per cent duty on landline telephone sets. This duty will be in addition to Rs500 imposed in the budget.

The official said that there was no additional duty on raw material or machinery.

Information Minister Sherry Rehman told reporters after the meeting that the cabinet had approved the regulatory duty on the items which were considered non-essential and luxury. She said that an SRO in this regard would be issued by the Ministry of Finance soon.

The additional duty on these items was recommended by a committee announced in the Trade Policy 2008-09.

The first month (July) of the fiscal year 2008-09 started with an import bill of $3.54 billion, raising trade deficit by almost 50 per cent. The import bill last year stood at $40 billion — the highest in the country’s history.