Pakistan automakers lament increase in sales tax

ISLAMABAD: The Pakistan Automobile Manufacturers Association (PAMA) on Friday ‘strongly’ rejected a 25 per cent increase in sales tax on locally manufactured and assembled vehicles, ARY News reported.  

The Economic Coordination Committee (ECC) had approved a 25% sales tax on locally manufactured vehicles, dealing a blow to consumers already struggling with inflation.

Under this approved proposal, a sales tax of 25 percent will be levied on vehicles worth Rs4 million or with 1400cc engines, meanwhile, the same tax imposition is expected to continue in the upcoming budget. The imposition of a 25 percent sales tax on 1400cc vehicles is likely to result in a price hike.

In a letter to Finance Minister Shamshad Akhtar, the automakers pointed out that the increase sales tax on vehicle worth Rs4 million will drastically decrease local sales, urging the government to withdraw the hike.

The association also rejected the ECC’s claim of collecting Rs4 billion tax by approving a 25pc hike in sales tax, saying that the local car manufacturing companies were already struggling.

It further stated that the production of vehicles in July-January period decreased by 47% compared to last year.

In the meeting, the ECC has also given its approval for a more than 65 percent increase in gas prices, fulfilling another demand from the International Monetary Fund (IMF).