Renault signs MoU with Majid Al Futtaim to set up car production plant in Pakistan

[VCheng]

I can understand that but to provide competitive price for the consumers, tax breaks is the only way. Besides, oil imports problem might not be forever given the investment on the pipeline recently.

In the long run, the oil import [bad balance of payment] can be sorted out provided that the Automotive industry is revived to boost the economy sector which can be solution to the financial problems as well.

Your approach can work only if consumers' rights have priority, which they do not, according to the policies in force. Cars are a luxury item in Pakistan according to the taxation structure, and a cash cow for a resource-strapped government.

 

[Finer]

Your approach can work only if consumers' rights have priority, which they do not, according to the policies in force. Cars are a luxury item in Pakistan according to the taxation structure, and a cash cow for a resource-strapped government.

That can be changed provided tax break is applied for the relaxation on the engine specs for the consumers and the Automaker industry [local assembly line]. That is the only way to boost the economy sector which itself is solution to financial problems.

 

[VCheng]

That can be changed provided tax break is applied for the relaxation on the engine specs for the consumers and the Automaker industry [local assembly line]. That is the only way to boost the economy sector which itself is solution to financial problems.

Please give me an example of the tax breaks you think should be provided.

 

[SoulSpokesman]

@Syed.Ali.Haider

Syed sb,

GST rate on base models of cars is 28%. For SUVs etc it varies between 42-52% IIRC. What are the comparable rates in Pak?

Regards

 

[Finer]

Please give me an example of the tax breaks you think should be provided.

Tax break means less tax to pay for. Normally, the government charges lots of money but for the foreign Automakers to boost the economy sector, the company should be given tax break to provide competitive price for the consumers. And relaxation on the engine specs to make it easier for the consumers.

With the certain percentage of tax that the government charges should be decreased 70% for Automakers and the consumers to boost the economy sector. In the long run, the government can net lots of money from the boosting economy.

Provided that the government convinces Automakers to invest for the assembly line in Pakistan that benefits the economy of Pakistan only. If Automakers are willing to invest in Pakistan through Assembly line, then the government should make their jobs much easier.

There is reason why Toyota has most of its cars assembled in North America through tax breaks to provide the competitive price for the North American consumers. Although, the newer vehicle, CH-R from Toyota, is pricey comparatively because it is assembled in Turkey so no tax break for Turkish assembled cars in North America. Definitely tax break in Turkey for Turkish consumers but selling foreign imports to North America, good luck getting tax break. It has to be local to get the tax break regardless of the origin of the Automakers.

 

[VCheng]

Tax break means less tax to pay for. Normally, the government charges lots of money but for the foreign Automakers to boost the economy sector, the company should be given tax break to provide competitive price for the consumers. And relaxation on the engine specs to make it easier for the consumers.

With the certain percentage of tax that the government charges should be decreased 70% for Automakers and the consumers to boost the economy sector. In the long run, the government can net lots of money from the boosting economy.

Provided that the government convinces Automakers to invest for the assembly line in Pakistan that benefits the economy of Pakistan only. If Automakers are willing to invest in Pakistan through Assembly line, then the government should make their jobs much easier.

There is reason why Toyota has most of its cars assembled in North America through tax breaks to provide the competitive price for the North American consumers. Although, the newer vehicle, CH-R from Toyota, is pricey comparatively because it is assembled in Turkey so no tax break for Turkish assembled cars in North America. Definitely tax break in Turkey for Turkish consumers but selling foreign imports to North America, good luck getting tax break. It has to be local to get the tax break regardless of the origin of the Automakers.

So how will the government make up for the lost revenue if it gives a tax break that you ask for, while waiting for the boost to the economy to actually materialize?

 

[SoulSpokesman]

@Syed.Ali.Haider

Syed sb,

So how will the government make up for the lost revenue

Freedom of the (printing) press....

Regards

 

[VCheng]

@Syed.Ali.Haider

Syed sb,

GST rate on base models of cars is 28%. For SUVs etc it varies between 42-52% IIRC. What are the comparable rates in Pak?

Regards

The rates for any imports are ridiculous, all added up, from about 100% to over 350%, and probably around 50% on domestically produced cars.

@Syed.Ali.Haider

Syed sb,

So how will the government make up for the lost revenue

Freedom of the (printing) press....

Regards

Yes, but that merely devalues the currency, with its own problems.

 

[Nike]

The rates for any imports are ridiculous, all added up, from about 100% to over 350%, and probably around 50% on domestically produced cars.



Yes, but that merely devalues the currency, with its own problems.

Cutting the level of expenditure, especially in sinkhole sector like Defense sector. Streamlined your state employee, and make moratorium to not accepted new employee for several years, make reform in pension policy, privatized liable assets and so on.

 

[RowdyRathore]

Renault should launch Kwid in Pakistan...

 

[Finer]

So how will the government make up for the lost revenue if it gives a tax break that you ask for, while waiting for the boost to the economy to actually materialize?

From the boosting economy? The only way to boost the economy economy is to be flexible towards the Automakers and the consumers. That is how the governments make up in the long run in the worlds.

As the government can make a lot more money from the foreign Automakers investing on the local assembly line to boost the economy sector which also provides jobs for Pakistan citizens means more money and flexible pricing for the consumers means more sales, even with the flexible sales tax. That is the proven receipt in North America.

 

[VCheng]

From the boosting economy? The only way to boost the economy economy is to be flexible towards the Automakers and the consumers. That is how the governments make up in the long run in the worlds.

As the government can make a lot more money from the foreign Automakers investing on the local assembly line to boost the economy sector which also provides jobs for Pakistan citizens means more money and flexible pricing for the consumers means more sales, even with the flexible sales tax.

The key is "in the long run". My question is what happens in the short term?

 

[Finer]

The key is "in the long run". My question is what happens in the short term?

Well, short term is not worth noticing considering Pakistan has nothing to lose whereas many things to gain in the long runs.

Right now, there is no investment so it makes no sense to talk about short term.

 

[VCheng]

Well, short term is not worth noticing considering Pakistan has nothing to lose whereas many things to gain in the long runs.

Right now, there is no investment so it makes no sense to talk about short term.

The problem is that the government is so hard up for money that it simply cannot afford to lose any revenues in the short term. This is where your argument breaks down.

 

[Finer]

The problem is that the government is so hard up for money that it simply cannot afford to lose any revenues in the short term. This is where your argument breaks down.

The problem is that there is no revenue to begin with. What kind of revenue we are talking about from no investment?

Maybe paltry price from small key company like Suzuki in exchange for many bigger-keys companies like VW/Skoda/Seat/Audi, Nissan/Renault, Hyundai/Kia/Genesis to milk which in hindsight is poor business decision.

There is the reason why the government is desperate to revamp the Automotive policy in Pakistan to encourage more investments to boost the economy sector. More assembly lines to boost the economy means more jobs and flexible pricing for the consumers with the flexible sales tax means more sales.

In North America, one person buy new cars minimum 3-5 times in 10 years because of flexing pricing along with the flexing financial plan and flexible on engine specs for the consumers.