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ISLAMABAD, May 27: The government has finalized a set of principles that would guide its tariff rationalization in the budget 2004-05 and onwards keeping in mind the WTO requirements, Dawn has learnt.
These principles have been prepared by the Central Board of Revenue (CBR), Board of Investment (BoI), Experts Advisory Cell (EAC) in consultation with ministries of commerce and industries and production.
Raw materials and components for local industry engaged in producing replacements of smuggled goods are being given preference in reduction of duties in order to enable the local industry to gradually edge out smuggling.
It has also been suggested to provide concessions on raw materials by inclusion in the existing concessional notifications where tariffication may not be possible in the short run.
SALES TAX: Presently, four GST rates i.e. 15 per cent, 18 per cent, 20 per cent and 23 per cent are levied. From now on, only one rate of 15 per cent would be levied in the first phase and thereby gradually decreased at the rate of one per cent each year to bring it down to 10 per cent.
WITHHOLDING TAX: Withholding tax on import of plant and machinery, which is considered as a tax on investment thus increasing the upfront cost of the project, should be abolished.
CENTRAL EXCISE DUTY: It has been proposed to abolish the CED on transformer oil, paints and varnishers, soaps and detergents.
CUSTOMS DUTY: Duty on raw materials, not manufactured locally, for soaps, dyes, rubber items etc., has been proposed to be reduced from existing 5-10 per cent to 0-5 per cent.
Duty on raw materials and components of ball-bearing to be zero rated through an SRO. Duty on plastic raw materials, not manufactured locally, would be reduced to 10 per cent from existing 20 per cent.
Duty on PVC to be reduced from 25 per cent to 20 per cent with effect from January 1, 2005 on expiry of government commitment to Engro Asahi on December 31, 2005. Protective duty on industrial raw materials, manufactured locally, which are also inputs for other local industries to be made uniform at 20 per cent instead of different rates ranging from 20-25 per cent at present.
Duty on new plant and machinery, not manufactured locally, for petroleum industry, food processing, marble industry, mining sector, construction sector, soda ash industry, petro-chemicals, fertilizer, pharmaceutical, chemical, leather and textile industry would be reduced to 0.5 per cent.
Duty on raw materials of oleo chemicals to be reduced special on palm stearin from 10 per cent to five per cent for manufacture of raw materials required by the soap industry.
Duty on raw materials of alkyd resin (raw material for paints) to be reduced to five per cent from 10 per cent. No roll back of already rationalized tariff. Only anomalies would be corrected. Reduction of tariff on raw materials would be the first preference over increase of duties on import of competing products.
The tariff rate structure on dyes stuff would be reduced to five per cent instead of 10 per cent for raw materials and to 10-15 per cent instead of 20 per cent at present.
Duty on pesticides under PCT heading of 3808-1060 has been proposed to be increased to 10 per cent from existing five per cent as sufficient local manufacturing facilities are available.
