Govt tables Finance Bill 2023 in NA to meet IMF conditions

ISLAMABAD: Federal Minister for Finance and Revenue Senator Ishaq Dar Wednesday introduced the Finance (Supplementary) Bill 2023 or the “mini-budget” in the National Assembly as the coalition government rushes to fulfil the conditions of the International Monetary Fund (IMF) to secure loan programme needed to avoid a default.

Addressing the lower house of parliament, the finance minister also announced to increase General Sales Tax GST rate from 17 to 18% and increasing the Federal Excise Duty (FED) on cigarettes.

Mini-budget proposals

Govt has increased GST on luxury items from 17% to 25%
Increase in federal excise duty on cigarettes and fizzy drinks.
Increase in federal excise duty on cement
GST has been increased from 17pc to 18pc
Benazir Income Support Programme (BISP) handouts increased to Rs400bn from Rs360bn
FDE on business and first-class air tickets to now be Rs20,000 or 50% — whichever is higher
GST to not be imposed on essential goods.

Ishaq Dar’s speech

Addressing the lower house of parliament, the finance minister compared the performance of the previous PML-N and PTI governments, saying that the nation was facing unprecedented crises due to previous government’s “substandard” policies.

“During Nawaz Sharif’s tenure, the GDP per capita increased while the Pakistan Stock Exchange’s (PSX) market capitalisation was $100 billion,” Ishaq Dar noted.

He further said that the PML-N always tried to take fewer loans, adding that Foreign investment had also increased during the PML-N tenure. “In contrast, during the PTI government, the loans hit record highs, and a common man’s income also plunged.”

“The PSX’s market capitalisation declined to $26bn during the PTI government”, he said, adding that the decrease showed a lack of investor confidence in the previous government. He asked the house to read the agreement done by the PTI government with the IMF.

The finmin further said that only after a few months in power, the current government faced the daunting task of managing the floods, saying that the country endured an estimated Rs8,000 billion worth of damage.

He assured the House that the prime minister and his cabinet would adopt simplicity and the former would take the nation into confidence soon in this regard. “It is our responsibility to adopt the measures, and give sacrifices. The premier will demonstrate frugality and the cabinet will also reduce its expenses,” he added.

‘Main points’

Sharing the main points of the Supplementary Finance Bill, the Finance Minister said an effort has been made not to impose additional taxes on daily-used items.

He said it is suggested to increase General Sales Tax (GST) from 17 percent to 18 percent. It has been decided to enhance the GST on luxury items from 17 percent to 25 percent.

For air travel, the Minister said those travelling through First and Business Class will have to pay Federal Excise Duty of 20 percent of the airfare or 50,000 rupees or whichever is higher.

He said 10 percent withholding adjustable advance tax will be levied on the bills of wedding halls in order to promote simplicity and austerity.

The finmin further said that Federal Excise Duty (FED) was being enhanced on Cigarettes and Sugary drinks, while it is proposed to increase Federal Excise Duty on Cement from 1.5 rupees to two rupees per kilogrammes.

The minister also said the government has decided to enhance the monthly cash assistance for Benazir Income Support Programme beneficiaries and for this purpose, the BISP budget is being enhanced from Rs360 billion to Rs400 billion.

Referring to the longstanding issue of Circular Debt in the power sector, Ishaq Dar said it was increased from Rs1,148 billion to Rs20,467 billion in a span of four years during the PTI government.

He said the circular debt was estimated to increase by Rs855 billion this year, but as a result of incumbent government’s reforms measures, it will be brought down to Rs336 billion.

Emphasizing the need for energy reforms, he said the country cannot afford 1400 billion rupees losses in the Power Sector per annum. The minister said the government has also envisaged structural reforms to bring improvement in the economy.

He said the economy is expected to grow by four percent next year. He pointed out that the State Bank of Pakistan has issued a priority list for the import of food items, pharmaceuticals and raw material for the export industry.

Senate proceedings

Later, the bill was presented in the Senate. However, the PTI and other opposition members staged protest and surrounded the dais of Senate Chairman Sadiq Sanjrani.

The session was marred by opposition members chanting “imported government na manzoor” and “PDM government na manzoor”.

The Senate chairman said that the recommendations on the bill should be presented in the house by February 23. Later, the session was adjourned till 10:30am Friday.

The federal government decided to pass the Finance Bill from the parliament, which is also being termed ‘mini-budget’, after President Dr Arif Alvi raised objections.

“The president advised that it would be more appropriate to take parliament into confidence on this important subject, and that a session be called immediately so that the bill is enacted without delay,” a statement issued by the President House said after the meeting.

In a late-night move, the federal government on Tuesday enhanced taxes on cigarettes with immediate effect to collect Rs115 billion out of the planned Rs170 billion mini-budget.

According to the notification issued by FBR, the standard rate of General Sales Tax (GST) has been jacked up from 17 to 18 percent with effect from February 15, 2023. The Federal Excise Duty (FED) on cigarettes has also gone up.

The government has increased FED on expensive brands from Rs6.5 per cigarette to Rs16.5 – an increase of 153%. For less expensive brands, per stick increase is from Rs2.55 to Rs5.05 – an increase of 98%.