Ahmed Mukhtar Naqshbandi
ISLAMABAD: The government is intending to bring two draft ordinances to impose taxes to the tune of Rs200 billion on imports, local media reported on Sunday.
The move is aimed at appeasing the International Monetary Fund (IMF) so as to resume a stalled loan programme. The government is also considering discontinuing the power sector subsidy and unleashing sales tax on raw materials for the export sector, especially textile industrialists.
The two measures can ruffle the feathers of the PML-N’s core constituency in an election year. More hikes in electricity and gas tariffs is also on the card.
Top tax machinery prepared proposed ordinances
The two proposed draft ordinances prepared by the top tax machinery related to the imposition of Rs100bn taxes and an Rs100bn flood levy on imports. The flood levy will be collected by the FBR at the import stage and will be used to bridge a shortfall in the petroleum development levy.
The IMF has estimated a shortfall of Rs300bn under the petroleum development levy (PDL) and asked the finance ministry to increase levy to Rs50 per litre on petrol and diesel, from Rs35 at present.
IMF Mission Coming on June 31
The IMF team is expected to reach Islamabad on Jan 31 (Tuesday) for talks after PM Shehbaz Sharif gave assurances for implementing these policy measures, which were delayed for around four months for political reasons as the same could have fuelled already-high inflation rate. However, the government had to accept the IMF conditions after the lender refused to budge.
The foreign exchange reserves have fallen to a multi-year low of $3.68bn, barely enough to cover three weeks of imports. Soon after assuming charge in September 2022, Dar pursued his agenda to bring down the dollar despite strong opposition from the IMF and some officials within the government.
Initially, some gains were achieved when Pakistani rupee strengthened from 240 to below 220 against the US dollar, but it didn’t sustained because the reserves fell, mainly because of a decline in exports.
