The recent government’s decision to raise the sales tax on cars from 18% to 25% for vehicles which have an engine capacity of less than 1,400cc and are priced at Rs4 million and above, has sparked concern among automakers.
The move, approved by the Economic Coordination Committee (ECC), comes at a challenging time for the automotive industry, which has already seen a significant downturn in sales due to high prices and inflation. In December, auto sales in Pakistan dropped by 66%, reflecting the sector’s struggles.
Industry representatives warn that the tax hike will further dampen car sales by making vehicles more expensive, potentially leading to decreased tax revenue from the sector. Critics argue that the decision, which now means duties and taxes constitute over half of a car’s price, was made without adequate consultation with the industry.
According to the Pakistan Automotive Manufacturers Association (PAMA), car sales have declined by 47.6% year-on-year in the first seven months of the fiscal year 2024. The industry views the increased tax as a move that could hinder the recovery of the already struggling automotive sector.
Correction: Engine capacity of MORE than 1400cc, not less than.
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less than 1400 cc. for more than 1400 cc 25% is already applicable. but now vehicle less than 1400cc and price more than 4 million are also going to be taxed at 25%, not a good decision though.
So much indirect taxation and then blame that people are not paying taxes.
Increasing in Tax cause sales drop
in the result of it ratio of Tax becomes less Which plays a part in the down fall of the Country Economy.
increasing sale tax day by day it not a solution for stabilizing the country economy.
I Cant understand why the government of Pakistan take such decisions that results in only downfall of the Country
why not cut down the number of ministries and ministers and luxury spendings there on rather than to raise taxes where does spend the huge amount of tax collected from corporate sector and direct tax from petroleum products which an ordinary consumer pays while fueling the bikes and other vehicles.Its just a bull shit to squeeze more blood from the poor people.
A very good decision from my perspective. This will push manufacturers to keep the 1400CC car prices below 4mil otherwise it will dent the sales. A good strategy to force people to avoid from buying overvalued car or pay tax on it. Clever 🤓
when this will be imposed
one car is a basic need. it should be on the multiple car keeper