Taxing the economy

Society Pakistan & World Affairs
1

One thing that I have found in Pakistan that defies economic logic is the heavy taxation of our relatively weak and certainly uncompetitive industries. I certainly understand that government needs money and that taxation is a necessary tool in a country where people rarely pay any tax at all.

So when I was watching Dawn today, while reading Military Inc. I was intrigued by the small segment on our TV industry. No no not Tv shows or movies. Rather a manufacturing industry taht manufactures and assemblies TVs domestically. One thing I found intriguing other than the fact that they were losing out to smuggled goods, was that they were competitive in our domestic market. Well relatively.

You see the market is small and they have to compete with brand names like Sony and LG, but they aren’t as competitive as they can be because there is a total taxation on their goods by 35%. So they are thus more expensive than imported brand products.

Additionally they are atleast 45% more expensive that smuggled goods.

So here is the question. If you have a domestic product why tax it so it is uncompetitive in its own market?

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Re: Taxing the economy

but TV's Now are not smuggled, they are legally imported and come with warranties. this used to be practise when there was Afghan Transit in place, electronics meant for Afghanistan end up again within in Pakistan without import duties hence cheaper.

that caused Sony Hyderabad assembling plant to shutdown.

but now its all different. Phillips, Sony, LG import and supply through dealers and local Luminar, Nobel, Waves, Singer has same set up.

a legal import has warranty and receipts now and they pay taxes and duties. smuggled ones were sold without any warranty or receipts.

But I agree there should be tax holidays to attract local manufacturers from pak and abroad.

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Re: Taxing the economy

Importation of second hand electronics is hurting the local industry as well. Now people have the option of buying cheaper 42" second hand TV at the same price as they used to buy 25" New one. However, no warranties on the used one.