The government introduced on Monday a ‘mini-budget’ envisaging additional tax measures of over Rs40 billion by imposing 5-10 per cent regulatory duty on import of 61 items, increasing duty by 5pc on another 289 items and levying 1pc additional customs duty on thousands of other items.
The decision was announced by Finance Minister Ishaq Dar at a news conference after presiding over a meeting of the Economic Coordination Committee of the cabinet to comply with a pre-condition of the International Monetary Fund on the last day of its deadline.
“Additional revenue measures have been taken to make up for a shortfall of Rs39.8bn in the revenue target for the first quarter of the current financial year,” he said. The committee also imposed 30pc regulatory duty on import of maize and kept unchanged the support price for wheat at Rs1,300 per 40kg. He said the ECC extended the applicability of 0.3pc withholding tax (instead of 0.6pc imposed in the current year’s budget) on banking transactions and filing of income tax returns to Dec 31. The meeting did not take up a proposed $16bn contract for import of liquefied natural gas from Qatar. Mr Dar said additional measures would generate Rs4.5bn through imposition of 5-10pc regulatory duty on 61 items which had no such duty.
He said the Federal Board of Revenue had identified around 1,400 non-essential imported luxury items that had eaten away almost half of around $3bn savings in the shape of lower oil import bill, but being a member of the World Trade Organisation it was not possible for Pakistan to ban them. Mr Dar said another Rs4.5bn would be generated by increasing by 5pc the duty on import of 289 items. The government would also get Rs21bn through 1pc additional duty on all items in the 5th schedule of the Customs Act currently being charged at up to 20pc customs duty. Nine categories having impact on common man would remain exempt from 1pc additional duty.
The list includes all non-dutiable imports, agriculture machinery, essential raw materials and inputs for textile, agriculture, pharmaceutical and aviation sectors, socially sensitive items like vegetables and priority industrial items of coalmining and renewable energy given protection under the 5th schedule, excluding the poultry sector. Other exempted areas from 1pc fresh import duty include import of fertilisers, seeds and spores for sowing, plant and machinery for manufacturing of goods, the telecom sector and raw materials of 25 sectors like artificial leather industry, pesticides, sugar mills, fan and flat rolling steel industry, electric motors, etc. Another Rs6.5bn would come out of increased Federal Excise Duty (FED) on locally produced cigarettes and Rs2.5bn through 10pc increase in duty on import of second-hand vehicles above 1,000cc capacity.