The collection of customs duty from automobile sector has shown decrease of 25.2 percent in 2006-2007 due to decline of 21.7 percent in dutiable imports of vehicles during this period. The FBR quarterly review revealed that traditionally, the automobile sector is the largest revenue source of customs duty.
A decline of 21.7 percent in the dutiable imports has reduced collection by 25.2 percent during 2006-2007. Since a major chunk of customs duty revenue from this sector is contributed by the import of motorcars/Jeeps, therefore, any change of policy related to motorcars, especially old cars/jeeps has serious repercussions for collection from this source.
It may be recalled that a revised policy regime restricting the import of motorcars older than 5 years was introduced in the budget (2006-07). As a consequence, not only the number of imported cars declined; it also adversely impacted the import value and customs duty as well.
It is evident that an overall loss of Rs 7.6 billion has been recorded during 2006-2007. Moreover, zero-rating of agricultural tractors in the budget (2006-07), has also resulted into a further loss of Rs 0.4 billion, the review added.