ISLAMABAD: Former chairman Federal Board of Revenue (FBR) Dr Ather Maqsood said that in order to avoid further noncompliance, the government should not increase the customs duty. While talking to Customs Today, he said that there is a chance the government would go for increase in the tariffs for the customs items in the Budget 2013-14 as the incumbent governments always keep in mind the short term goals.
He said to bring sustainability and achieving long term goals, the government should stick to the existing structure of customs duty and should be focused more on its implementation and full compliance. He feared that any increase in tariffs would result in low investment in the market. He said that Pakistan could not impose regularity duty on Customs under WTO agreement because this practice was condemned by most of the countries under WTO agreement.
Dr Ather elaborated that Pakistan did not sign the agreement even then there was no need to levy the regulatory duty as the government already was getting huge revenues through Customs Department by imposing fair percentage up to 20 percent on import goods. He said customs duty on raw material resulted in low production.
Dr Ather said in the past the highest customs tariff was 300 percent which was reduced gradually. “There is still a need of ‘tariff rationalisation’ which indicates more taxes on imports and exports of finished goods. Revenue collection on imports is no more a source of fund collection for the last 20 years in Pakistan and it is seen that high tariff rates result in damaging exports and are a barrier in promoting quality products in Pakistan. The reduction of taxes on imports could be an indirect source of promoting exports,” the former FBR chairman added.
He said the clearance system in Pakistan was weak and flawed. He stressed on the need of improving the functioning of departments concerned to eliminate these flaws. He said tax policy measures should be consistent envisaging long term goals and even short term policies should not be deviated from the key policies.