The condition imposed in the federal budget for 2018-19 restricting non-filers to buy new vehicle would frustrate the new entrants and would also shrink the annual of locally manufactured cars resultantly the sales would be dropped by nearly 32 percent.

Pakistan Automotive Manufacturers Association in a letter written to Miftah Ismail Minister for Finance, Revenue and Economic Affairs said that the new condition to be placed soon, allowing only tax filers to buy cars would result into sharp drop in the sales.

It would also cripple the government’s tax collection from the auto sector in the coming years. Currently cumulative contribution of the auto sector to the national exchequer has been around Rs 120 billion.

Assuming a filer buying vehicle once in a five years, the filers currently stood around 1.2 million, the yearly sales are expected to go down about 240000 units, against the current annual projection of 350,000 units.

The Association said if the condition stays the early projection that the car sales to jump to 550,000 units under the Auto Policy of 2016-21 would be lost.

They further said that the new entrants would see this new condition alien to auto policy. Nearly four to five new car manufacturers plans to invest in Pakistan in almost three years period which would frustrate them and they will lose confidence in country’s saying.

The Association was of view and also endorsed the government’s move to broaden the tax net and tighten the noose of non-filers and tax evaders but instead of imposing this kind of restriction, the government should increase the advance tax or withholding tax rate.