Apparently in its last-ditch effort to curtail the rising import bill and swelling trade deficit of the country, the government has massively enhanced regulatory duties on essential and luxury items, including cars.The shakeup of tariffs and duties will possibly generate additional revenues of Rs 40 billion, but experts believe it will open the floodgates of corruption and smuggling across the country. The part of the decision is also being looked as the violation of automobile policy, which the federal cabinet had approved earlier to attract new investments in the sector.The current import bill of the country is $53 billion and imposition of tariffs by 350 percent to generate additional revenue of Rs 40 billion or $38 million will not leave any meaningful impact on the import bill.It is yet to ascertain the circumstances that led the government to bring mini-budget, but one thing is clear that all is not well with the economy. Financial experts believe the enhancement of duties will put more burdens on the customs and other law enforcement agencies as new duties will bring windfall for smugglers. The country is already under pressure after the completion of extended facility programme of the International Monetary Fund programme in September last year.
Pakistan faced at least $12 billion current account deficit during the last fiscal year because of sharp increase in imports and continuous decline of exports which plunged to $20.8 billion during the period. According to sources, the external sector of Pakistan will continue to remain under pressure during the current fiscal year and administrative measures of this kind will not yield the desired results.The successive governments in Pakistan are in the habit of launching makeshift policies to resolve longstanding issues and the end result is failure. It is simply unfortunate that a comprehensive import policy could not be made in the country and the latest move will also likely to be reversed in the coming months.
The only way to generate revenue is to enhance trade and industrial activities in the country. Making and breaking laws is a process which confuses traders, industrialists and investors and put the economic activities on halt. The time has come the policymakers and political leaders at the helm of affairs should bring paradigm shift in their approach to generate revenues. Taxes are imposed to regulate and balance trade activities and should not be a source of revenue generation for the country.
