The federal government is taking new tax measure to collect Rs 80 billion which are being termed as mini budget. under this move to lift a ban on the import of “non-essential luxury items”, practically it will be a mini-budget, and consequently imported phones, vehicles, home appliances, electricity and cigarettes will become expensive in the country.
To cover for the lost revenue from the fixed tax on retailers, the finance ministry will increase the tax rates on tobacco and cigarettes.
Federal Finance Minister Miftah Ismail, at a press conference on Thursday, confirmed that the government was going to lift the ban on the import of luxury items to meet IMF demands.
Experts said apart from the IMF, Ahmed that the European Union and the World Trade Organization (WTO) are also urging Pakistan to scrap the ban, which they view in violation of international laws.
Under pressure from IMF, removal of one percent sales tax on import and local supply of pharmaceutical raw materials, possibility of imposition of duty on beverages, proposal to grant duty and tax exemption to foreign diplomats on imported goods, emergency in the country.
It was decided to implement the agricultural reforms on the basis, the Prime Minister instructed the relevant ministries to compile the reform plan in 2 days.
According to the representative, the federal government decided to present a mini-budget through an ordinance to achieve tax revenue of more than 80 billion rupees. 36 billion additional taxes will be levied on the cigarette industry and tobacco through the Ordinance.
Under the international trade law, countries cannot impose a ban on the import of foreign goods except in certain cases.
Three months back, the coalition government banned the import of hundreds of luxury items to check the outflow of foreign currency from the country.
Now, when the ban is being lifted, the government plans to increase regulatory duty on these items to curb their imports and to control the foreign currency outflows.
The government measure will make imported vehicles, mobile phones, home appliances, clothes, shoes, purses, and imported food more expensive.
Tax on cigarettes
The finance ministry has suspended the collection of fixed-tax on small retailers for at least three months.
Finance Minister Miftah told the media that the government will increase tax on tobacco and cigarettes to raise Rs36 billion and an ordinance will be issued in this regard.
Electricity will be taxed
Instead of the fixed tax of 42 billion rupees on retailers, new tax measures of 27 billion rupees are being implemented, in which 5% sales tax and 7.5% income tax will be collected from electricity bills for 3 months from July 1st to September 30th, while from October 1st, up to 50 units of electricity will be collected.
Taxes will remain in effect at the same rate on bills, while electricity bills of more than 50 units will be gradually increased, electricity bills of traders from 1 to 50 units will be taxed at the same rate, while electricity bills of more than 50 units will be increased by five percent.
Tax will be increased to 7 and a half percent and then to 10 percent, while 12 and a half percent sales tax will be imposed on 1,000 units and 20 percent sales tax on more than that, which will achieve the target of 27 billion rupees, 20 billion rupees tax will be recovered on vehicles, mobile phones and luxury goods as additional customs duty, regulatory duty and sales tax.