Vehicles and others: ECC set to rationalise tariff on hundreds of items

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet is all set to rationalise tariff on hundreds of items including vehicles and others requested by the Ministry of Industries and Production (MoI&P) and other sectors on Wednesday (today), sources close to Secretary Commerce told Business Recorder.

The National Tariff Policy 2019-24 (NTP) stipulates that all proposals for levy, amendment or removal of tariffs shall be examined at the Tariff Policy Centre and, after approval by the Tariff Policy Board, shall be submitted to the Cabinet or Parliament, as the case may be, for consideration.

According to sources, these are as per direction of the Federal Cabinet dated July 6, 2021 in the deferred proposals of the summary moved by the Ministry of Commerce regarding removal/imposition of duties on different items of the auto sector.

The Ministry of Industries and Production (Mol&P) proposed the imposition of Regulatory Duties on Electric Vehicles, Hybrid Vehicles and Conventional engine (ICE) Vehicles in CBU (Completely Built Unit) condition.

They also proposed the levy of Federal Excise Duty on locally-assembled vehicles to bring down the high growth in auto-sector imports in the country causing the trade deficit to widen.

The sources maintained that in the 34th meeting, the Tariff Policy Board (TPB) acceded to the proposals of the Ministry of Industries and Production. The decision of the TPB was reiterated in its 35th meeting, to bring more clarity in the recommendations/decisions as suggested by the Federal Board of Revenue (FBR).

The auto sector related proposals are: imposition of 50 per cent RD on import of electric vehicles having more than 50 kWh battery pack; (ii) RD on hybrid vehicles (CBU) to be increased from 15 per cent to 50 per cent on 1,501 cc to 1,800 cc vehicles; (iii) RD on CBU import (normal gasoline vehicle ) to be increased from 15 per cent to 50 per cent; (iv) FED on locally manufactured cars/SUVs from 1,501 cc and above to be enhanced to 10 per cent ( existing is 5 per cent); (iv) FED on 1,501-1,800 cc cars / SUVs in CBU condition to be enhanced to 10 per cent (existing is 5 per cent).

Moreover, the TPB also decided, on the recommendations of Tariff Policy Centre (National Tariff Commission), to impose 10% RD on textile material Polypropylene (HS Code 5402.4800, 5402.5300, 5402.6300, 5404.1200, 5503.4000, 5506.4000) in order to address tariff anomaly at request of the industry, to remove 5% RD on Varnishes (HS Code 3208.2010) as these are used in making of furniture, and to impose 20% RD in lieu of Anti-Dumping Duty on the import of Soda Ash (HS Code 2836.2000) as requested by the industry and National Tariff Commission (NTC) for a period of 6 months.

In view of this, the Commerce Ministry has proposed that changes regarding imposition/removal of RDs on several items in line with the decisions of the TPB taken in its 34th and 35h meetings, may be allowed.

Prime Minister Imran Khan as Minister Commerce has seen and authorised submission of the summary to ECC of the Cabinet along with views/comments of FBR and Mol&P.