Islamabad: Pakistan which has been reeling under severe economic crisis, is now putting burden on its people to obtain IMF loan, avoid default and strengthen its fiscal position. The cash-strapped South Asian nation has slapped new PKR 115 billion taxation measures in a bid for a massive bailout.
Late on Tuesday night, the Shehbaz Sharif-led government imposed taxation measures through a notification issued by the country’s Federal Board of Revenue (FBR) after President Dr Arif Alvi denied promulgation of ordinance for unveiling a mini-budget in order to adhere to the International Monetary Fund (IMF) conditions.
GST jacked up
Post mid-night, with the start of 15 February, the standard rate of General Sales Tax (GST) has been increased from 17 per cent to 18 per cent in Pakistan.
Sales tax is chargeable on all locally produced and imported goods except computer software, poultry feeds, medicines and unprocessed agricultural produce of Pakistan and other goods specified in Sixth Schedule to The Sales Tax Act, 1990.
This means, people of Pakistan will have to pay more for all the commodities that they purchase in the country.
The announcement of hike in GST rate was made by FBR in the Statutory Regulatory Order (SRO) after getting approval from the federal cabinet on a mini-budget in the shape of Tax Laws Amendment Bill 2023.
Excise duty on cigarettes increased
The Federal Excise Duty (FED) on cigarettes has also been increased in order to fetch an additional PKR 115 billion out of PKR 170 billion agreed to by the Pakistan government in line with the IMF conditions.
Luxury items to cost more
Local reports quoted top government officials saying that the GST will now be levied on most of the high-end luxury items at the rate of 25 per cent. The announcement of this will be made on Wednesday (15 February) when the Tax Amendment Bill 2023 will be tabled in the Pakistan parliament.
GST rate on all imported luxury items, most of which were banned by the Ministry of Commerce sometime back, have been increased. Also, proposal to raise the rate of the sales tax on some locally manufactured luxury goods is expected to be made in the parliament today.
Beverages to become expensive
Reports said that the government will increase FED on beverages, sugary drinks and juices from 13 to 20 per cent and it would be made a part of the Tax Amendment Bill 2023, which will be laid down in the parliament.
The Pakistan government has convened the National Assembly session at 3:30 pm (local time) on Wednesday, and the Senate at 4:30 pm to lay down the Tax Amendment Bill 2023.
As per reports, Pakistan’s Finance Minister Ishaq Dar was scheduled to announce the salient features of the mini-budget through a televised speech last evening but it was cancelled at the last hour.
Dar told the media that after attending federal cabinet meeting he had requested the president to promulgate an ordinance but Alvi declined. The President instead suggested to the government that the bill should be introduced for imposing taxes.
Dar further said that he told the president that there were taxation issues involved. He said that it would be difficult for the government to wait for more 8 to 10 days because certain measures would have a financial impact but the president refused to entertain the request.
The finance minister stated that the government adopted the other route and directed the FBR to issue an SRO for hiking the GST rate.
IMF ‘tough conditions’ for aid to Pakistan
The IMF said that it expects Pakistan to take steps to fill the massive fiscal gap. One of the proposals of the global lender is to increase petroleum levy by PKR 20-30 a litre.
Another consideration is to charge 17 per cent GST on petroleum, oil and lubricant (POL) products. “… Or increasing the GST rate by 1 per cent from 17 to 18 per cent through a presidential ordinance,” The News International newspaper quoted unnamed sources saying.
