In Budget 2018-19 non-filers were barred from purchasing cars and houses. Finance Bill for 2018 stated, “Non-filers shall not be permitted to purchase new motor vehicles manufactured in Pakistan or new imported vehicles.”
Now the car assemblers and automakers are urging the government to review this decision as it will affect the automotive sales in Pakistan.
Read also: Highlights of budget 2018-19
Pakistan Automotive Manufacturers Association (PAMA) has recommended few changes in the budget, otherwise, it can negatively affect the auto industry of Pakistan.
In a letter written to the Finance Minister Miftah Ismail, PAMA Director General Abdul Waheed Khan has stressed that in the new section 227C in the income tax ordinance which restricts non-filers from buying motor vehicles will affect the auto sales in Pakistan.
He said, “Presently there are about 1.2million filers, as this new condition would be put into effect, only filers would buy vehicles which would result in a sudden drop in sales. Assuming a filer buying vehicle once every five years, the yearly sales are expected to go down to about 240,000 units, against the current annual projected figures of 350,000 units.”
Adding, “We understand that if the filer condition stays all industry volume projections to 550,000 units, under the Auto Policy 2016-21 would be lost. The new entrants would see this new condition alien to the auto policy, to the word of which, they responded and invested in our market. All those big names presently heading to our market would frustrate with this new condition and would lose their confidence in our policies. Besides major adverse consequences to the industry, the new condition would also be counterproductive; government losing the revenue of second highest revenue paying industry.”
Also, PAMA DG further recommended a scheme to the government that will compel non-filers to pay taxes. He said that different tax rates should be set for filers and non-filers for the next five years to encourage the non-filers to pay the taxes.
He said, “This idea may be carried further to tighten the noose of non-filers, purchasing the automobiles, by gradually increasing the amount of advance tax, under section 231B of the Income-tax ordinance, for non-filers and simultaneously decreasing this tax for the filers.”
PAMA DG cleared that, “We find no merit in imposing the impugned new condition and request the same to be withdrawn. We know the government since pursuing the policy of making things difficult for those out of the tax net. Some major steps have already been taken in that direction previously and also taken in this budget.”