Pakistan Automakers Protest Against 25% Sales Tax Hike, Cite Production Decline and Economic Strain

The Pakistan Automobile Manufacturers Association (PAMA) Strongly Voiced its Opposition to the Recently approved 25% increase in Sales tax on locally Manufactured and assembled Vehicles. The Decision Sanctioned by the Economic Coordination Committee (ECC) Comes as a Significant Setback for Consumers already Grappling with Rising inflation.

According to the approved Proposal a 25% Sales tax will be imposed on Vehicles with a Value of Rs4 Million or those Equipped with 1400cc Engines. This tax imposition is Expected to Persist in the Upcoming Budget, Potentially leading to a Surge in Vehicle Prices. In response, the automakers have penned a letter to Finance Minister Shamshad Akhtar, highlighting concerns that the elevated sales tax on Rs4 million Vehicles could substantially diminish local sales. They fervently appealed to the Government to reconsider and withdraw the tax Hike.

Contrary to the ECC’s assertion of Collecting Rs4 billion through the 25% Sales tax hike, the automakers Contended that local car manufacturing companies were already Grappling with financial challenges. They Emphasized that the Production of Vehicles during the July-January Period had Plummeted by a staggering 47% when Compared to the Corresponding Period in the Previous year.


Read More: Pakistan has approved a significant hike in gas tariffs and sales tax on vehicles.

In the same meeting the ECC also greenlit a more than 65% increase in gas Prices, fulfilling yet another demand from the International Monetary Fund (IMF). These Developments have Sparked Concerns within the Automotive industry as the Combination of Heightened Sales tax and increased Gas Prices Poses additional Challenges to an already Struggling Sector. The plea from PAMA reflects the industry’s Plea for Relief and Reconsideration in the face of these Economic Pressures.

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Read More: Government Implements Substantial Increase in Petrol and Diesel Prices.

In Conclusion the Pakistan Automobile Manufacturers Association’s Opposition to the 25% Sales tax hike Underscores the industry’s vulnerability amid Economic Challenges. The approved tax increase, Coupled with a Decline of 47% in Vehicle Production, Poses a Significant threat to local car Manufacturers. Urgent Reconsideration of this Decision is Crucial to mitigate the Potential negative impacts on Sales and overall industry Stability.