The Pakistan Tyres Importers and Dealers Association (PTIDA) on Saturday proposed to reduce customs duty in the range of five percent to 20 percent on tyres to arrest smuggling of the product.
In the budget proposals presented to Finance Minister Ishaq Dar, the tyre importers recommended reduction in the customs duty on import of passenger car tyres from the existing 25 percent to five percent; from the existing 20 percent to five percent on import of light truck tyres and proposed zero rating on the import of truck / bus tyres, which is currently five percent.
“Tyre is a smuggling prone item due to high rate of import duties and sales tax along with huge gap between the local demand and production,” according to the proposals.
Tyres are the most preferred choice of smugglers, which not only hurts the government revenue but legal importers, as well as local industry.
The proposals further said that the local market requires tyres in 250 different sizes and patterns, of which 80 percent are radial, while the local industry produces only 50 sizes / patterns, of which 50 percent production is non-radial.
The local market needs 9.75 million tyres (excluding tractor, motorcycles), of which the local manufacturing caters to only 1.21 million tyres, while legal imports amount for 2.7 million tyres per annum, according to the proposals.
Local tyre manufacturers were already exempted from the customs duty and withholding tax on the import of raw material.
The association said that reduction in duty structure will not affect the sales and profitability of the local manufacturers because of their captive customer base.
Moreover, it will transform the undocumented trade towards documentation and the government will earn additional revenue of Rs2.5 billion.
Source: The News
Published: 16 Mar 2014