The Standing Committee of Lahore Chamber of Commerce and Industry (LCCI) on Customs, Valuation and Import has proposed that a 'customs bonded warehouse' should be set up at Wagah border to facilitate the business community in trade with India. The committee also proposed that NLC and government approved bonded carriers should be allowed to transport goods across the border into India. The convenor of the standing committee, Irfan Qaiser, told Business Recorder here on Wednesday that the committee has finalised its proposals for the federal budget 2005-06.
The LCCI body has recommended rationalising the extraordinarily high transport charges of Pakistan Railways from Lahore to Amritsar for boosting Indo-Pak trade and reducing cost of trade. These charges, he said, are more than Lahore to Karachi charges.
In order to create balance in trade with India, the committee has proposed that import of finished items should be avoided. However, import of finished items material may be allowed to boost local manufacturing to meet demand in Pakistani market, apart from creating job opportunities. Ministry of Commerce should formulate Trade Policy in such a way that it supports local industry, it added.
About Afghan Transit Trade, the LCCI body said it must be channelled to check malpractices and revenue evasion. A similar transit trade agreement should be finalised with Afghan government to open trade channel with Central Asian States.
The committee noted that smuggling-prone items are those on which total effect of duty and tax is 25 percent or more; for example, tyres, cloth, bearings, stationery items and others. It proposed that smuggling-prone items should be exempted from sales tax, or customs duty should be reduced to five percent.
To check under-invoicing, the committee has proposed that section 25-A of Customs Act 1969 should be implemented in letter and spirit. It also said that around 85 percent import consignments of Pakistan, which include 80 percent of Punjab, are cleared at Karachi. Lahore Collectorate is considered as an ideal Collectorate after Karachi. Therefore, CARE project should be implemented at Lahore Collectorate so that import consignments, which are accompanied with shipping bills, could be directly transshipped by the shipping line to Lahore. In this case transshipment permit is not required if Customs is informed before arrival of ship. It will reduce under-invoicing and time delays for upcountry cargo, the committee observed.
Referring to another issue, the LCCI body said that the rate of income tax on the commission of indentors on imports is very high ie 10 percent. It is therefore proposed that the rate of income tax on the commission of indentors be reduced to 4 percent, Irfan Qaiser added.
He said that the committee also proposed that the equipment and material of local industry should be given preference against imported material for the turnkey projects of public enterprises. For example, PTCL is paying whole of customs duty and sales tax on the procurement of goods from its contractor. It causes loss to the PTCL due to high cost and also discriminates against locally manufactured items over imported ones.
About auto-vehicles, the committee said that tariff reduction on the auto vehicles could not bring the prices down and car supplies are subject to 8 to 12 months advance payments booking in the country. The import of old/used cars benefits only the luxury cars like BMW, Mercedes Benz, Pajero, Range Rover and this option does not facilitate local consumers of 800-1200 cc cars. It is therefore strongly recommended that customs duty on cars should be reduced by 50 percent of their existing duty slabs, Irfan said.
The LCCI body also called for rationalisation of customs duty. It proposed that there should be only five-percent customs duty on import of raw material not manufactured locally, 10 percent on raw material manufactured locally and zero percent on raw material of those items which are being produced locally. This facility should also be given to commercial importers who are supplier of small industries, the Committee demanded. The LCCI body also proposed introduction of two new tariff slabs in Pakistan Customs Tariff, Irfan said.