‘Mini budget’: Govt likely to impose additional duty on luxury goods

ISLAMABAD: In order to break deadlock with the International Monetary Fund (IMF), the federal government is likely to impose taxes to the tune of Rs200 billion as preparations for a ‘mini-budget’ are underway, ARY News reported on Tuesday, citing sources.

The development came after the International Monetary Fund (IMF) shared lists of prerequisite actions with Pakistan and told the authorities that Islamabad will have to move towards implementing all demands for reviving the stalled Fund programme.

Sources told ARY News that the government was considering implementing the mini budget from February 1, 2023. The government is all set to promulgate a Presidential Ordinance to impose taxes to the tune of Rs200 billion.

As part of the mini budget, the government is likely to impose additional duty on several luxury goods. The government was also considering withdrawing tax exemptions granted on goods worth Rs70 billion.

It has been proposed to impose ‘flood levy’ or ‘withholding tax’ on banking transactions of non-filers. Meanwhile, it was also proposed to impose ‘withholding tax’ on bank transactions exceeding Rs50,000 per day.

However, sources added, the proposed tax will not be applicable to individuals included in the Active Tax Payers List. The government estimated Rs50 billion income from withholding tax on non-filers, they added.

Sources further claimed that the government may impose flood levy up to three percent on imports of raw material and furnished goods. A flood levy will be imposed on foreign exchange profits of banks, sources added.

IMF’s list of prerequisite actions

IMF has asked Pakistan to take all required actions that could pave the way for striking a staff-level agreement and releasing of $1 billion tranche under the Extended Fund Facility (EFF).

The sources say the IMF has sought a roadmap from Pakistan for the collection of Rs855 via petroleum levy till June 30, 2023. The Pakistani authorities have to jack up levy on diesel by Rs15/litre and drag it to Rs50/litre.

The IMF has also sought settlement of circular debt in the gas sector for the revival of the stalled loan programme, the sources said and added Pakistan has to jack up the gas price up to 74% to fix the debt.

READ: PAKISTAN, IMF YET TO FINALISE SCHEDULE FOR TALKS: SOURCES

Pakistan has been also directed to take steps for the increase of Rs300 billion in tax collection and increase the basic electricity tariff. It has also been learnt that IMF wants Pakistan to end the ‘artificial ban’ on the dollar exchange rate.

Finance minister seeks PM’s assistance

Earlier in the day, it was reported that Finance Minister Ishaq Dar sought Prime Minister Shehbaz Sharif’s assistance after failing to pacify the International Monetary Fund (IMF) for reviving the loan programme.

Sources told ARY News that Finance Minister Ishaq Dar will attend a crucial meeting with the IMF officials from Qatar via video link, whereas, PM Shehbaz Sharif will also attend the virtual meeting.

The virtual meeting will also be attended by the finance ministry’s senior officers. PM Sharif will apprise the IMF officials regarding the prevailing economic situation.

‘Pakistan wants to complete 9th IMF review soon’

PM Shehbaz Sharif said that the coalition government wants to complete the 9th review without any further delay and he had told IMF chief executive about Pakistan’s willingness.

He made the statement while launching the ‘Youth Business and Agricultural Loan Scheme’ today.

“I have told the IMF chief executive that Pakistan is willing to to complete the pending review and incorporate the conditions raised by it,” he added.