Heavy vehicles to cost more

An official in Hinopak Motor Company (HML) said the prices of truck chasis and complete bus hover between Rs1.6 million to Rs8 million and these vehicles will become costlier by Rs300,000 to Rs1.3 million due to imposition of 16 per cent general sales tax. — File Photo

KARACHI: The withdrawal of zero-rated exemption from commercial vehicles (trucks, diesel and CNG buses) is bound to make vehicles costlier.
An official in Hinopak Motor Company (HML) said the prices of truck chasis and complete bus hover between Rs1.6 million to Rs8 million and these vehicles will become costlier by Rs300,000 to Rs1.3 million due to imposition of 16 per cent general sales tax.

In only one category the government was charging 17 per cent sales tax and 2.5 per cent federal excise duty on buses of less than 40 persons’ seating capacity. From July 1, 2011, the rate of GST will be 16 per cent but there will be no FED on this segment, thus bringing some relief in prices.
In the last one year the overall price increase in commercial vehicles segment was 10-14 per cent due to rupee yen parity, hike in steel prices, rising material cost and high general inflation that resulted in higher cost of production.
HML deputy general manager sales and business development Shahab Anwar, in a statement, said the imposition of GST on commercial vehicles would badly hit commercial automobile industry, which is already in declining phase.
The zero-rating facility extended to the commercial automobile sector in 2006 was of strategic importance for modernisation of trucking industry to cope with the transportation needs of the country.
He said this policy in the past had witnessed a drastic change in the transportation trends as new and heavy prime movers were now seen on the Pakistani roads. This also helped to reduce the adverse overloading phenomenon.
The new tax measures will directly hit the automobile industry and unemployment will rise in the principals as well as the vendors’ areas.
The decision will also have a direct inflationary effect as high transportation cost would result in general price hike and consumers will be affected. The commuters will also suffer with high fares of buses.
He said it looked strange that the government was trying to meet its revenue target from the heavy vehicle industry, whose yearly sales hover between 4,000-5,000 units.
Shahab said prior to the new budget the government also allowed import of second-hand vehicles which was already impacting commercial vehicles industry operating at 50 per cent capacity.
It will have a negative impact on overall industry as new investment may not be encouraged.