Pakistan's proposed new energy vehicle (NEV) tax incentives risk creating a striking disparity in which ordinary motorcycle buyers could bear a substantially higher tax burden relative to the value of their vehicles than wealthy buyers of expensive electric cars, according to a former chairperson of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM).

The proposed incentives could provide up to Rs150 billion in tax concessions for about 50,000 high-value vehicles, while motorcycles would remain subject to the standard taxation regime, said Abdul Rehman, former chairperson of PAAPAM. Under the proposed structure, a Rs10 million vehicle attracting 1.0 per cent sales tax will generate about Rs100,000 in sales tax. By comparison, taxes on an ordinary motorcycle could represent a much larger share of its purchase price.

"The tax structure is creating a striking disparity in Pakistan's auto market," Rehman said, questioning who will ultimately bear the cost of the incentives. "An ordinary motorcycle buyer will end up paying proportionately more tax than someone purchasing a Rs10 million car," he said. For millions of middle-class Pakistanis, motorcycles are not luxury purchases but essential transportation for commuting to work, taking children to school and running small businesses.

Rehman said he is not opposed to wealthy Pakistanis buying expensive electric cars but questioned whether taxpayers should subsidise such purchases while the country struggles to finance health care, urban infrastructure and affordable transportation. He noted that Karachi's metropolitan budget is around Rs55 billion and Lahore's city budget about Rs22 billion, arguing that the proposed Rs150 billion concession for roughly 50,000 expensive vehicles warrants a broader policy debate.