High GST proposal worries hybrid manufacturers

KARACHI: A proposal to increase the general sales tax (GST) on locally-made hybrid electric vehicles (HEVs) and plug-in-hybrid vehicles (PHEVs) has become a source of worry for assemblers.

The proposal envisages increasing GST to 18 per cent from the current 8.5pc with effect from July 1.

They said they had been hearing this signal from the relevant government departments that the 8.5pc GST would exist till June 30, 2026 as the current auto policy, loaded with incentives, is also expiring on the same date.

An assembler said the proposal to increase sales tax on HEVs and PHEVs could significantly alter vehicle-pricing dynamics as in Pakistan’s auto market, relative price positioning determines demand. “If hybrids lose their monetary advantage, the demand balance could shift,” he feared.

Any major change in tax incentives could influence both consumer demand and future investment decisions. “If the price gap between conventional vehicles and hybrids narrows, consumers may return to fossil fuel vehicles,” the assembler said. At the same time, he added, EV adoption could slow if the broader environment becomes uncertain.

Stakeholders say tax policy has historically acted as the central driver behind........

© Dawn Business