Pakistan to cut taxes on imports of raw materials to boost growth

ISLAMABAD: Pakistan will cut taxes on imports of raw materials to spur manufacturing and overall economic growth, Bloomberg quoted Prime Minister Imran Khan’s trade adviser as saying on Monday. 
Customs duties on input items needed by pharmaceutical, chemical, engineering and food processing industries will be reduced by 3 percent to 10 percent, Abdul Razzak Dawood, Khan’s adviser on commerce, said in an interview to Bloomberg. 
“That will help lower the import of finished goods, encourage local production and put the nation in a position to boost exports,” he said. “Pakistan had ridiculously high duties. The objective is to put Pakistan on par with other countries on trade taxes.”
Bloomberg said the proposal would be part of the federal government’s annual budget for the year starting July 1, by when it targets to achieve a growth rate of 4.8 percent. The nation forecast growth to be 3.9 percent this year after a rare contraction last year. The new budget is scheduled to be presented in the lower house of the parliament on June 11.
“Paring import taxes will be a huge policy shift for Pakistan, given more than 40 percent of its total tax revenue is generated from levies on inbound shipments,” Bloomberg said. “Khan’s government is seeking to end the nation’s reliance in recent years on foreign loans and bailouts, and instead boost industrial productivity and the share of exports in the economy.”
To that end, the administration will extend concessional long-term financing for exports and working capital financing to businesses in the next fiscal year, Dawood told the American publication.
The nation’s exports haven’t grown significantly in the past decade, averaging $23 billion annually. For the next financial year, the government hopes it will be higher than $25 billion.