Hoping that imposition of customs duty on vehicles imported by Afghanistan will stop dumping and subsequent smuggling of cars into Pakistan, the Central Board of Revenue (CBR) has rejected outright a proposal of the Prime Minister Secretariat and the NWFP governor to launch a new customs amnesty scheme to regularise non-duty paid smuggled vehicles in the Federally Administered Tribal Areas (Fata).
The CBR has informed the PM Secretariat and the NWFP governor that the tax authorities are facing serious difficulties in regularisation of cars in the Fata at concessionary rate of the customs duty and sales tax on a one-time dispensation, sources disclosed here on Sunday.
Three schemes were launched for regularisation of smuggled vehicles on April 11,1998, June 12,1999 and December 16,1999,which were strongly criticised by the International Monetary Fund (IMF) because 'whitener' schemes disrupt a sound tax policy.
Giving justification for turning down the proposal, the CBR said that Afghanistan has recently announced the imposition of a tariff on the import of goods.
The CBR does not yet know as to what tariff will apply in Afghanistan on vehicles. If the same is reasonable, the large scale dumping into Afghanistan will come to an end.
That will choke up the possibility of further large scale smuggling of vehicles into Pakistan. At that juncture, the regularisation of vehicles already available would be in order, but subject to punitive tariff on grounds of equity.
The CBR pointed out that since the last amnesty scheme expired on March 15, 2000, hundreds of non-duty paid/smuggled vehicles have been confiscated.
The public has now come to accept the finality of the government's decision. Another amnesty scheme may cause persons, whose vehicles were confiscated, to go into litigation on the grounds of discrimination.
On the anticipation of severe reaction from the local manufacturers of cars on launching of new scheme, the CBR opined that allowing depreciation up to 75 percent or even 90 percent of the assessable value (say for vehicles older than four years and eight years respectively), would be resisted violently by the local manufacturers as the payable amount would reduce substantially.
Moreover, the local assemblers had strongly opposed lowering of tariff rates on import of cars in budget 2002-03.
Another reason for not starting amnesty scheme is that the grant of amnesty in one part of the country will be resented by people of other areas as being discriminatory.
The CBR anticipated that there is no assurance that future smuggling of vehicles will be stopped.
As a result, there may be a need after some time for yet another amnesty as three amnesties granted in the past on the same grounds failed to eradicate the menace of smuggling, tax authorities added.