1,630 tariff lines: 2pc additional duty may be removed

The government is likely to remove 2 percent Additional Custom Duty on 1,630 tariff lines, in addition to substantial reduction in duties on 350 tariff lines in federal budget 2020-21, as all the stakeholders have reached a consensus on this plan, sources close to Prime Minister Advisor on Commerce told Business Recorder.
The Commerce Ministry is now in the driving seat of tariff rationalization, and has hosted at least eight or nine meetings of the Tariff Board, comprising officials of different ministries aimed at looking into ways to reduce duty on raw material related tariff lines as massive devaluation of the rupee and different duties have hit raw material imports meant for re-export and finished products.
The sources said, in federal budget 2019-20, the government had reduced customs duty from 3 percent to zero percent on 1,636 tariff lines related to raw materials and intermediaries to boost exports, with an estimated hit of Rs 20 billion in revenue but 2 per cent ACD remained applicable on those tariff lines because of disagreement between Commerce Ministry of Federal Board of Revenue (FBR). "The concerned stakeholders have almost agreed that 2 percent ACD on 1,336 items should also be removed in the forthcoming budget expected to be announced in the second week of June," the sources maintained. The Commerce Ministry which was already behind its export target is now facing up to $ 4 billion shortfall in exports after the global economy was hit by the Coronavirus and domestic industry suffered due to the lockdown.
Announcing the federal budget 2019-20, the then Minister of State, Hammad Azhar had claimed that in the past, due to lower revenues from domestic taxes, customs tariffs were used to enhance revenue from imports, saying that Pakistan has the highest average customs tariffs and import stage revenues in the region. He had further argued that the revenues from imports increased steeply, costs of imported raw materials and intermediary goods also increased, negatively impacting on competitiveness of both domestic and export industries.
In addition to removal of ACD on 1636 tariff lines, the government has also decided to slash duties (Custom Duty, Regulatory Duty, Excise Duty and ACD, etc) on 350 tariff lines in the budget which were proposed by different industries and came under discussion by the Tariff Board.
The sources said, proposal on reduction of duties was prepared by Chairman Habib Group, Ali Suleman Habib, Advisor on "Make in Pakistan" who passed away on March 31, 2020 and have already been cleared by the Prime Minister in principle. The role of Ministry's officials who have to implement the policy was almost negligible in its preparation.
This National Tariff Policy has to be tabled before the federal cabinet for final approval after evolving consensus with the stakeholders which has not yet developed.
Commerce Advisor Abdul Razak Dawood and the Secretary Commerce, Sardar Ahmed Nawaz Sukhera had developed differences after the latter allegedly opposed multi-billion rupees concessions to Lotte Pakistan under the garb of import of chemicals from India.