The automotive sector, which is struggling to recover its activities due to the proliferation of Covid-19, has asked the government to cut taxes in the Finance Act of 2020.
"The decline of the auto industry in the country started last July when the government announced that non-taxpayers could only register one vehicle against their CNIC," said Mashood Ali Khan, former president of the Pakistan Association of Automobile Parts and Accessories Manufacturers (Paapam) .
"After that, we were charged additional fees from 7 to 11% and federal taxes up to 7.5%."
The rupee fell against the US dollar in September and October 2019, which had a negative impact on the car industry. The former chairman of Paapam pointed out that the association had hoped that 2020 would be a year of resurgence in car demand and the January and February data were also encouraging.
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However, the figures were even lower compared to the sales figures for the corresponding months of the previous year.
"We were hoping for new car models back then, but the outbreak of the Corona virus in April 2020 resulted in zero car sales," he said.
According to Khan, car manufacturers in Pakistan produced only 89,284 cars in the current fiscal year, compared to 196,415 units in the same period last year.
He emphasized that the drop in production raised many questions when Pakistani manufacturers produced about 250,000 cars a year a few years ago and wanted to reach the 500,000 mark.
"Instead of going up, we went back into production," he complained. "Now we expect the government to make tax cuts easier."
“Currently, sales tax of 18% is levied on cars. If the government reduces it to one digit, it will strengthen the entire auto industry and also improve the state's revenues, ”he said.
The former chairman of Paapam feared that if the sales tax were kept at the current level, the car industry would continue to be devastated and the state's revenues from the sector would also suffer.
Pakistan's auto industry contributes 2.8% to the country's gross domestic product (GDP) and, according to Khan, increases the treasury by 30 billion rupees in the form of taxes.
He said , the sector is the third taxpayer after the oil and gas industry and telecommunications. "But executives from other industries, such as textiles and food used to buy cars, have stopped buying because all sectors are affected by Covid-19 and there is virtually no demand.
"The auto industry is suffering in many countries, including India, but the government provides incentives while our government is not providing any incentives to our Automobile sector.
