ISLAMABAD: The Pakistani government on Thursday proposed a significant increase in sales tax on electric and hybrid vehicles to discourage their import to save crucial foreign exchange, in a clear blow to its much-hyped green push in the country. 
Pakistan approved an ambitious National Electric Vehicles Policy in November 2019, with targets and incentives aimed at seeing electric vehicles capture 30 percent of all passenger vehicles and heavy-duty truck sales by 2030, and 90 percent by 2040. 
The government has now proposed increasing the sales tax from 5 percent to 17 percent on imported electric vehicles and from 8.5 percent to 12.5 percent on hybrid vehicles through a supplementary finance bill. 
It has decided to end tax exemptions on nearly 150 items and impose a uniform 17 percent General Sales Tax (GST) on goods that were earlier taxed at 5 percent or 12 percent. The measures are a pre-requisite for the revival of a $6 billion International Monetary Fund (IMF) program, which would allow the release of more than $1 billion loan to the South Asian nation and help unlock funding from bilateral donors. 
Government officials acknowledge that the imposition of proposed tax hikes would adversely impact the efforts to achieve the targets. 
“We advised the government against the tax increase on imported electric vehicles, but they’ve rejected it,” Asim Ayaz, general manager at the Engineering Development Board Pakistan (EDBP), told Arab News on Friday. 
“But the government says we have to save the foreign exchange at the moment.” 
He said the tax hike would discourage import of electric vehicles, which was “definitely contrary” to the government’s initiatives for a green revolution in the country through electric automobiles, phasing out of fossil fuels and tapping of renewable energy resources. 
Pakistan has recently witnessed a surge in the import of electric vehicles after the government announced tax breaks in the National Electric Vehicles Policy and even the installation of EV charging stations in different cities. 
For the first time, Pakistanis imported 390 new and 19 used electric vehicles in fiscal year 2021, according to Pakwheels.com, one of the largest online marketplaces for car buyers and sellers in Pakistan. 
But business persons and dealers say the proposed tax hike would roll back this progress by pushing the prices of electric-powered automobiles significantly up. 
“This proposed tax increase in the finance bill clearly shows the government wants to discourage the electric vehicle import,” Shaukat Qureshi, general secretary of the Pakistan Electric Vehicles and Parts Manufacturers and Traders Association, told Arab News. 
The cumulative effect of the tax hike and other duties would amount to 35 percent now, which would practically make the import of electric vehicles unviable, he said. 
“The whole world is switching to electric vehicles to cut the fossil fuel use, but we are moving in the opposite direction by levying taxes on them,” Qureshi said. 
Environmentalists and climate change experts said the hike was expected as the government had failed to install the required infrastructure for the electric vehicles and give a plan to phase out the obsolete vehicular fleet after the announcement of the much-hyped National Electric Vehicles Policy. 
“This will serve as a clear blow to the government’s claims of introducing electric vehicles to replace conventional cars running on fossil fuels,” said Ali Tauqir Shaikh, director of Asia Climate and Development Knowledge Network (CDKN), which works to enhance quality of life for the most vulnerable to climate change.