At a recent meeting of ECC, presided over by Prime Minister, Revenue Division revealed that during the current financial year, Pakistan had seen a surge in imports while the growth in exports was modest. In the first two months of the current year, imports grew by 24.9 per cent while exports had shown an increase of 11.2 per cent. This led to a higher trade deficit whereas imports of edible oil, petroleum products, chemicals, fertilizers and machinery could not be curtailed, while growth in imports of non-essential items or items whose substitutes are locally produced require to be curtailed.
With an objective to substantially decrease the import bill of the country, Commerce Division has requested FBR to increase the RD on a number of items on which RD already exists, as well as to impose RD on new items. FBR has held several rounds of consultation with Commerce Division to identify such non-essential items of import.
Revenue Division further stated that in order to reverse the trend of widening trade deficit and to generate revenue for financing the export package, the following measures relating to RD were proposed by the FBR: (i) to levy Regulatory Duty on 97 non-essential items, It was proposed that RD of 10 per cent on 26 items, RD of 20 per cent on 36 items and RD of 30 per cent on 35 items may be imposed; and (ii) to enhance the rate of RD on 212 non-essential items currently subject to RD under SRO 568(1)/2014, FBR proposed that RD may be increased by 10 per cent on 24 items, by 20 per cent on 75 items and by 30 per cent on 112 items. Moreover, specific RD on Betel Leaves has been approved to be increased by Rs 200 per kg.
Revenue Division pointed out that the effects of these measures on decline of imports and on revenue have been estimated through a partial equilibrium analysis by means of software simulation conducted with the assistance of Commerce Division which predicts a reduction in imports of about $ 467 million in the remaining period of the current financial year while an estimated amount of Rs 22 billion would be collected as additional revenue.
During ensuing discussion, Secretary Planning, Development and Reforms pointed out that the imposition of the proposed RD on articles/items relating to Christmas festivities would invite criticism as these articles relate to minorities. Similarly, imposition of RD on diapers for adults (patients) of weight exceeding 25 kg and diaper wadding may be reviewed. Moreover, financial impact of these items would not affect overall proposed RD. The ECC agreed with the proposal of Secretary Planning and directed FBR to exclude such items from the proposed list.
Copyright Business Recorder, 2017