960419

Govt considering NTC proposal

Tariff rates, schedules

may be notified for

five years

NASIRA ZUBERI

ISLAMABAD: In order to make tariff policy more transparent and consistent, a proposal under which tariff rates and schedules may be notified for a period of five years is being considered by the government.

Official sources indicate that the National Tariff Commission (NTC) send a policy guidelines document carrying proposals for rationalising and restructuring the entire tariff structure to the government.

The notification of tariff rates for next five years, a part of the proposal, will help existing, as well as prospective investors allocate resources and chalk out future production plans. NTC sources claim that it will also bring stability to the industrial sector, boost production, and ultimately lead to more revenue generation for the government. Moreover, it will eliminate the need for SROs.

The industrial community feels that customs duties are predominantly used for the purpose of revenue generation, rather than resources allocation. The NTC has reiterated that customs duties should effectively be used to encourage the development and growth of the industry which is efficient in the use of resources, is self-reliant, and is internationally competitive.

The guiding principles emerging from the study of about 120 industrial sub-sectors by the NTC concentrate on transposition.

The NTC suggests that tariff rates be cascaded, so that the rate of import duty leviable on inputs remains less than the respective products. While discussing the issue, the proposal points out that at present, out of 2900 items being imported, 650 are transposed upto 7-8 digit level. The NTC says the rest of items require transposition at least to this level, which would not only allow imposition of appropriate rates of duties on various imported items, but would also help in the implementation of customs tariff, in many respects.

The advantages of transposition, the NTC says, will achieve transparency in the implementation of customs tariff; allow imposition of appropriate rates of duties on various import items; identify and deal with items requiring concessionary and protective rates of duties; cater to further statistical requirements; enable identification and classification of items required for exports; facilitate the implementation of sales tax and help bring up to date the statistics of imports of interest to the country's commerce, trade industry, and the government.

Other proposals in the policy guidelines are:

- In cases where there is sizeable smuggling of certain items and local industry is being hurt by such clandestine imports, duty on end-products as well as inputs should be reduced to the level of opportunity cost of smuggling to discourage such imports.

- Distinction between industrial and commercial imports should be removed to avoid misuse of concessionary imports for 'rent' purposes.

- The existing policy of providing tariff incentives under the deletion programmes may be phased out by the process of tarification. NTC can help in this exercise with the available exercise.

- Rate of duty items imported under the head 'others' should either be higher or at least equal to the rates applicable to the items classified against given PCT sub-heads under the same main head to avoid misdecleration and misclassification.

- The tariff rates should be adjusted proportionately to the extent of official devaluation to ensure the same tariff for the user industry in items of their inputs or protection levels.

- If for the production of certain items, sufficient capacity remains unutilised and reasonable portion of demand is met through imports, tariffs of such industrial units should be changed favourably after through analysis.

- Specific and composite duty rates may be converted into ad val duty rates with the exception of eatable and general consumer items.