KARACHI – To fulfil the requirements set forth by the International Monetary Fund (IMF) to receive the ninth tranche of loan funding, Minister of Finance and Revenue Senator Ishaq Dar on Wednesday introduced the Supplementary Finance Bill 2023, also known as the mini-budget by the public and opposition.
To reduce the budget deficit and broaden the revenue base, the government has suggested levies on a number of industries. What the finance minister has suggested in the additional bill is as follows:
To raise an additional Rs115 billion, the government hiked the Federal Excise Duty (FED) on cigarettes and the general sales tax (GST) rate from 17 to 18% last night.
President Arif Alvi rejected the administration’s proposal to impose additional taxes for revenue increase to relaunch the IMF programme on Tuesday.
During a meeting with the president, Finance Minister Ishaq Dar provided an update on the status of negotiations with the IMF delegation regarding the ninth review. The declining foreign exchange reserves of the State Bank of Pakistan (SBP) have blocked the negotiations since September 2022.
According to the official broadcaster, the president expressed appreciation for the administration’s efforts to reach an agreement with the IMF and gave the assurance that the state will uphold the agreements reached between the government and the IMF.
The minister announced during the meeting that the government planned to pass an ordinance to increase tax revenue.
However, the President suggested that it would be more appropriate to consult the Parliament on this crucial issue. Additionally, the President suggested summoning a session immediately to ensure prompt passage of the measure.
Dar stated last week that the talks with the international lender ended “positively” and that in order for the government to levy Rs170 billion in taxes through a “mini-budget” in order to receive the loan programme.
Details
- Increase in GST on luxury items from 17% to 25%
- Increase in FED on business and first-class air by Rs20,000 or 50%
- 10% withholding adjustable advance income tax to be imposed on bills of wedding functions
- Increase in FED on cigarettes, soft and sugary drinks — from Rs1.5 per kg to Rs2 per kg
- Increase in GST from standard 17% to 18%
- The government will not impose GST on essential goods, which include wheat, rice, milk, pulses, vegetables, fruits, fish, eggs, and meat.