ISLAMABAD: The National Assembly Standing Committee on Finance, on Friday, expressed serious concern over doubling of the regulatory duty (RD) from 10 to 20 percent on stationary items. During the meeting of the Finance Committee, the chairman of the committee stated that the RD on the import of pencils gives a very negative signal across the board.
The FBR chairman informed that the RD on the import of pencils has no revenue implications, but it was done to protect the domestic manufactures. The committee discussed the matter pertaining to levy of Regulatory Duty (RD) on stationary items (led pencil).
The Member Customs said that the pencil falling under PCT heading 6909.1000 attracted CD at 20 percent, ST at 17 percent, ACD seven percent, WHT 5.5 percent. During the budget exercise of 2021-22, various proposals from pencil local manufacturers were received for imposition of RDS on the pencils in order to promote import substitution and protection of local industry.
The manufacturers requested to impose Regularity Duty (RD) at 10 percent on imports of pencils, pens and other stationary items to save domestic industry, according to them stationary sectors were providing employment to work 20,000 skilled workers using precision advance engineering equipment and there are five manufacturing units in Pakistan, out of which two have been closed, one unit is operating partially and two units are in operation.
However, during subsequent meeting of the Tarif Policy Board, the rate of RD was enhanced from 10 percent to 20 percent. The representatives of the industry informed that the government has always kept these items free from taxes to reduce the cost of the same. The National Education Policy 2009 also call for providing educational stationery including pencils, rubbers, sharpeners, pens, inks and books free of costs to students, and it was expected that in the Budget 2021-22 that the government will consider reduction in Customs Duty and other taxes on the stationary items, which are being used by the students especially by the school going children.
However, instead of reducing the Customs Duty (which is already at highest side i.e. 20 percent on pencils, in addition to six percent Additional Customs Duty), "Regulatory duty" has been imposed on the importation of "pencils", through post Budget SRO 840(I)/2021.
The initially 10 percent regulatory duty had imposed vide Srl No 592 of SRO 840(I)/2021 dated 30.06.2021, surprisingly within 10 days, the same has been further increased to 20 percent vide SRO 903(I)/2021 dated 9th July 2021.
The said imposition of regulatory duty is not only causing additional burden on students but also contrary to the government's policy and will seriously damage/destroy dreams of the government to provide "Free education for all" and also in violation of the Articles 25A and37(b) of the Constitution of Pakistan 1973, the industry added.
The committee noted that levy of RD on any item should be considered in light of the requirements of local level. The committee recommended that local manufacturers may be invited in the next meeting for final directions to the FBR in that regard.
Copyright Business Recorder, 2021