LAHORE, March 5: The Federal Board of Revenue (FBR) has moved a summary, seeking approval of Economic Coordination Committee (ECC) to halve taxes on import of new hybrid electric cars from the current 75pc to 37.5pc.

Officials told Dawn on Tuesday that the proposal had been moved to bring down prices of hybrid cars and encourage three domestic assemblers to switch to hybrid technology in view of increasing oil bill.

An FBR official who asked not to be named told Dawn on Tuesday that taxes on hybrid car import could be reduced only after ECC approval.

He, however, was not sure if the proposal would be discussed in the next ECC meeting. But he said the tax advantage was meant only for new hybrid cars.

An indication about cutting taxes on import of hybrid cars was given by FBR chairman Ali Arshad Hakeem during an informal chat with textile manufacturers here on Friday night.

In spite of their high prices, imported hybrid electric cars are becoming quite popular among users in Pakistan for the last several months because of their fuel efficiency.

For example, almost 2100 new and old units of Toyota Prius were imported during November 2011 and October 2012.

According to official car import numbers available with Dawn, over 1,140 Toyota Prius were imported during the first four months of the current fiscal year to October 2012 alone compared with less than thousand units brought before the end of the last financial year.

The government has already exempted Hybrid Electric Vehicles (HEV) from customs duty, sales tax and withholding tax, which are in excess of 75 per cent of the applicable tax rates under SRO 607 (I)/2012.

Under the notification, the depreciation in duties and taxes in case of old and used HEVs is admissible at the rate of 2 per cent per month subject to a maximum of 60 per cent.

Still the current import prices of hybrid cars, including the smaller ones, remain awfully high and out of reach of most consumers.

The slight reduction in the levies is believed to have pushed import of hybrid electric cars in the first four months of this fiscal year.

Abuzar Bokhari, chief executive officer (CEO) of Porche Centres Pakistan, stressed the need for forcing domestic assemblers to bring highly fuel efficient hybrid technology in the country with a view to cut oil imports and carbon emissions.

Hybrid cars are almost twice as much efficient compared with non-hybrid cars, saving at least 40 per cent fuel costs.

“The only other way of cutting fuel costs and reducing carbon emissions in the environment is conversion of all vehicles on CNG. That is neither feasible nor desirable because of depleting gas reserves and high cost of imported gas,” he told this reporter.

He criticised the government policy of “subsidising” three Japanese assemblers – Toyota, Honda and Suzuki – at the cost of consumers, taxpayers and environment.

“While the world has moved to Euro-V standards, we’re trying to adopt the obsolete Euro-II standards,” the Porche representative said. He was of the view that the government should “tax a car according to the level of its carbon emissions and damage it does to the environment rather than on engine strength,” but agreed that the idea was a little too early for Pakistan.

He, nevertheless, was of the view that local assemblers should be helped to gradually move into hybrid technology as was done in California.

If existing assemblers are unwilling to convert to hybrid technology, the government should give incentives to new investors intending to set up hybrid car manufacturing facility.