Government Endorses Gradual Elimination of Import Taxes per National Tariff Policy
In a decisive move, the federal government has announced plans to slash import duties, including phasing out Additional Customs Duty (ACD) and Regulatory Duty (RD), in a bid to spur investments and boost exports. This economic shift, led by PM Shehbaz Sharif, aims to create jobs, suppress inflation, and attract foreign investment.
According to a statement from the Prime Minister's Office (PMO), ACD, currently ranging from 2% to 7%, and RD, currently between 5% and 90%, will be phased out over the next four to five years. Additionally, the government has capped customs duty (CD) at a maximum of 15%, reducing it from previously exceeding 100% on certain items.
The number of CD slabs has also been reduced to four, aiming to simplify import processes, reduce legal complexities, and ensure a level playing field for various industries.
Meanwhile, the Federal Board of Revenue (FBR) has approved temporary import of vehicles by tourists, a move likely to enhance tourism in the country.
This economic adjustment came during a key meeting on the National Tariff Policy at the Prime Minister's Office. The Prime Minister emphasized his commitment to establishing a strong economy, providing job opportunities, and eliminating inflation.
The government's comprehensive economic reform plan incorporates a gradual reduction in import tariffs, a move that is considered a major stepping stone towards economic recovery and export-led growth. This decision is expected to curb unemployment, bring inflation under control, attract increased international investment, and create new job opportunities.
Moreover, the reforms are anticipated to provide local industries with easier and cheaper access to raw materials, intermediate goods, and capital equipment. This, in turn, will facilitate more foreign investment in Pakistan.
During the meeting, the Prime Minister reviewed the proposal in detail, noting that reducing tariffs would not only stabilize the current account deficit but also generate higher revenue than currently collected through customs duties.
Apart from the benefits, there are concerns about potential negative impacts. For instance, lower tariffs could worsen the trade deficit due to increased imports over exports. Additionally, local manufacturing sectors that rely on protective measures could face adverse effects.
However, through careful management, these risks can be mitigated, ensuring that the desired outcomes are achieved. In essence, this economic strategy represents a significant step towards a more competitive, investment-attractive, and job-creating Pakistan.
- This economic strategy, spearheaded by PM Shehbaz Sharif, is predicted to attract increased international investment, as it incorporates a gradual reduction in import tariffs, aiming for a more investment-attractive economy.
- The government's reform, aimed at fostering export-led growth, expects to create new job opportunities and curb unemployment by slashing import duties, phasing out ACD and RD, and reducing customs duty.
- By providing local industries with easier and cheaper access to essential goods like raw materials, intermediate goods, and capital equipment, the government aims to facilitate more foreign investment in Pakistan, supporting business growth.
- It's essential to manage potential risks, such as the worsening trade deficit due to increased imports over exports, and the adverse effects on protective local manufacturing sectors. With careful management, these risks can be mitigated, ensuring a competitive, job-creating, and Defi (decentralized finance) conducive Pakistan.
