January 26, 2023

1 to 2 % flood levy on imported goods under consideration

Tax

1 to 2 % flood levy on imported goods under consideration

ISLAMABAD, Dec 17,2022-  The government is considering various options to levy a flood tax of 1 or 2 percent on non-essential imported goods to collect 35 to 70 billion rupees, it was reliably learnt.

The government is exploring various options to revive the suspended IMF program to increase revenue during the financial year 2022-23.

Under the proposal under consideration, there is a plan to increase revenue on the one hand and discourage imports on the other hand as the foreign currency in the State Bank is dwindling and it has reduced to 6.7 billion dollars, leading media reported quoting the reliable source.

In this context, consideration is being given to bringing a presidential ordinance to reduce unnecessary imports.

A senior government official said that the FBR is working on various options under which a flood levy of one or two percent will be levied and a presidential ordinance will be implemented for the same, a senior official claimed.

That energy related products including petroleum, RLNG, furnace oil and coal may be exempted from the proposed flood levy.

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He further said that if the government imposes one percent levy, it will collect (January to June) 30 to 35 billion rupees and if 2 percent is imposed, it can collect up to 70 billion rupees.

The FBR has set a collection target of Rs 7.47 trillion for the current financial year and in the first five years, the board has collected only Rs 2.688 trillion, while the current month’s target is to collect Rs 0.965 trillion.

FBR has to collect another Rs 4.782 trillion in the next seven months (December 2022 to June 2023) to meet the annual target.

According to IMF estimates, it will be difficult for FBR to meet the target due to economic slowdown and falling imports. However, top FBR officials say they are hopeful that the target is achievable.

It is unlikely that food and medicine will be levied as they are essential items.

However, a senior official claimed that energy-related products including petroleum, RLNG, furnace oil and coal may be exempted from the proposed flood levy. (Monitoring desk)