The automobile industry faced a huge drop in sales as car bookings have decreased 30 per cent owing to the restriction placed by government on the purchase of vehicles by the non-filers of tax returns and its implication is likely to be felt by the end of this year.
The agriculture sector, which makes for thirty per cent of Pakistan’s gross domestic product (GDP), has been excluded from the restriction.
The small businesses dropping below the tax threshold, pensioners and retired people who are not included in the tax return filing system fold, as well as the overseas Pakistanis, are among the ones who are affected by the ban.
As per a source in the auto industry, car bookings after the ban was implemented on the 1st of July has been established that the yearly auto sales would decrease from 240,000 to 168,000 units.
The restriction has affected the low-engine capacity car market. Pak-Suzuki Motor, which overshadows the vehicle category below 1,000 ccs, showed a vital decline in sales in the month of August 2018 with volumes decreasing twenty-seven per cent to 8,683 units on a year-on-year basis. The Ravi and Mehran variants showed the greatest decrease in sales with a percentage dropping of fifty per cent to forty-two per cent respectively.
As per sources, the value of yearly sales of the industry would face a major decrease of Rs 100.80 billion. Afterwards, the Federal Board of Revenue ‘s (FBR) tax collection would decrease by Rs32.25 billion as thirty-two per cent of an automobile price is composed of taxes.
The source said that if the ban continues it would lead to a decrease of two thousand five hundred assembler jobs while twelve thousand five hundred individuals working directly or indirectly for the vendor plants would also be losing employment. This would lead to a slowdown in the large-scale manufacturing industry and GDP growth.
The source was of the opinion that it was the duty of FBR to expand the tax net, but it is neither just nor wise to discipline a private sector like automobile by limiting its market size.
Asad Umar—the Finance Minister recently suggested in the changed Finance Bill that the ban on non-filers should be lifted, which restricts them from buying new properties or vehicles.
He proposed that the CNIC and other details of each vehicle buyer are given by the assemblers to the FBR on a per month basis, which could be used to hunt down the non-filers.
The government has faced severe criticism over this clause and the Senate Standing Committee on Finance has denied the proposal.