Immediate stoppage of illegal trade of used cars by local dealers has been demanded by Pakistan Automobile Manufacturers Assemblers Dealers Association (PAMADA) as it is not only damaging the reputation of the country but also eating up its revenue resources and destroying the billion dollar industry and livelihood of thousands of skilled workers.
Iqbal Hussain Shah, Vice Chairman PAMADA in a statement issued here on Thursday said that dealers of used cars have turned the policy for overseas Pakistani into commercial import policy, which is the first violation of the laws and is paving the way towards corruption in government departments.
Arguing his case, he said, firstly, the facility meant for those who have given their sweat and blood to earn foreign exchange for the country, is abused by the trader mafia giving them peanuts in return besides promoting corruption at different levels by illegally importing more than the allowed age of used cars. He said that this was evident from the fact that more than 65,000 cars were imported from Japan in FY 2011-12, whereas estimated Pakistani population in Japan is around 10-15,000. Secondly, nowhere in the region is used car import allowed, not even in the bigger economies like India and Thailand.
The government, therefore, should only allow brand new cars so that competition remains on a level playing field. The trader mafia opposes this move knowing that the local auto industry is producing cheaper cars than anywhere in the region and that is exactly why they are afraid of piling up stocks of new cars as the consumers will easily choose locally made cars because of the huge price difference.
Moreover, he said, the trader mafia is still importing five year old cars although the age limit of used cars had been reduced to three years by the government in November last year. Customs authorities have clear knowledge of this fact but have turned a blind eye towards the situation for reasons best known to them, he said. He said that during the last seven years, international car prices have been jacked up due to currency depreciation but used car dealers are not passing any benefit to consumers while huge 60% depreciation allowance that eases down imported cars' prices has not benefited the consumer either.
"If the same rebate is given to the local car industry, the consumers could have cheaper brand new 'Made in Pakistan' cars with warranty and availability of quality spare parts at comparably lower rates," he added. He said that according to law, the Import Tariff Prices (ITP) rate should be set as per the prices of the new model of any car and then rebate in terms of depreciation is given, while the same is being done as per car prices of 2005. The benefit again is siphoned off by dealers and both the overseas Pakistanis whose papers were used and poor buyer of the car are both deprived of these benefits.
He said that if the ITP is calculated properly as per the current prices of new cars and then giving 60% allowance for depreciation, duties and taxes on Daihatsu Mira (800 cc) should be $4994 whereas the government is collecting only $1760 on the same due to tariff anomalies as the importers misquote the car prices.
Similarly, for Toyota Vitz (801-1000c) the duties and taxes should be $6,686 on used vehicle but only $2,200 is being added to the national kitty, making the government incur the loss of $4,486 on one unit. The local automobile industry generates Rs 65 billion revenue for the government in terms of taxes and duties whereas the imported cars contribute merely Rs 21 billion per year with massive tax evasion, Shah said.
He appealed to the President to promote the local auto industry to increase the properly documented economic activities while putting a complete ban on illegal import of used cars, which would not only bring back investors' confidence in government's investment friendly policies but would also strengthen the national economy with more revenues and employment opportunities.
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