Shaikh Khalid Tawab Chairman United Business Group (Sindh Region) underscored the need of tariff rationalization in forthcoming Federal Budget 2020-21. While commenting on the tariff structure in Pakistan, he stated that tariff is generally used in Pakistan just to collect the revenue instead of controlling imports and protecting domestic industry while globally the aim of tariff is to curtail imports, protecting domestic industry, improve competition, employment generation, attracting investment and improving balance of payment. Historically, there is a positive relationship between custom duty revenue and import growth in Pakistan which also confirmed that the hypothesis that the tariff is employing to collect revenue collection.
Shaikh Khalid Tawab further stated that the tariff structure in Pakistan is very much complicated due to multiple taxes, concessionary SROs and different types of regulatory duties promotes under-invoicing, smuggling and mis-declaration which affects manufacturing sectors and create hindrance in investment. The employment of high import tariff has created multiple distortions and affects the competitiveness of manufacturing sector by increasing cost of doing business.
He underlined the need of maintaining the principle of cascading whereby every industry should be split into various segments and standardized tariff slabs should be incorporated according to the segments starting from 0% for Base line Materials & Raw Materials, 5 to 10% for intermediate goods, 15% for semi-finished goods, 20 to 25% for finished goods & consumer goods. Moreover, the industrial users and commercial importers should be treated equally in tariff rationalization in order to remove mis-utilization of facilities. He emphasized on the removal of that the multiple layers of tariff, taxes and regulatory duty on the goods that are not being manufactured locally.