ISLAMABAD, May 1: The government is considering a proposal to rationalize customs duty on raw materials and finished products in the up-coming budget of 2004-05.

Well-placed sources told Dawn on Saturday that the proposal was one of the proposals received by the Central Board of Revenue (CBR) from various chambers, associations and individual exporters for consideration in the next budget.

The stakeholders have asked the government to reduce customs duty on raw materials, which they believed would make Pakistani products more competitive in the international market. They further demanded to raise import duty on some finished products to encourage their local production.

The sources said that it was expected that the government would reduce customs duty on raw materials by 5-10 per cent while custom duty would be raised on some finished products to provide protection to the local manufacturers.

However, the sources confirmed that the maximum customs tariff would remain at 25 per cent and would not be reduced further.

According to the sources, the tax authorities were also discussing the possibility to reduce the duty slabs to four from the current five slabs - 25 per cent, 20 per cent, 15 per cent, 10 per cent and 5 per cent.

The decision, if taken, the sources said that excluding some items, customs duty will be reduced to 15 per cent, 10 per cent and 5 per cent on all those items, which were currently imported at 20 per cent customs duty.

According to the sources, the tariff rationalisation would encourage the growth of export led products mostly in the textile sector.