Govt to unveil mini budget within days
n Tax withdrawal on retailers’ power bills, grant for PSO termed reasons for mini budget.
ISLAMABAD – The federal government will announce mini budget in next few days to generate at least Rs60 billion to offset the relief given to the retailers sector and supplementary grant for Pakistan State Oil (PSO) to avert its default.
In the outgoing week, the government had taken two decisions, which would likely to enhance the budget deficit. The government on last Sunday had allocated Rs30 billion for PSO to avert its default with the help of supplementary grants. The Economic Coordination Committee (ECC) of the Cabinet had directed Finance Division and Federal Board of Revenue (FBR) to submit a proposal for generation of Rs30 billion through taxes within a week.
Later, on Thursday last, the government had withdrawn its decision of imposing fix tax on electricity bills for retailers, which would also cost Rs30 billon in terms of tax collection. In the annual budget, the government had announced fixed tax regime for the retailers. The tax was charged on the monthly electricity bills as Rs3,000 for monthly bill up to Rs30,000, Rs5,000 if the monthly bill exceeds Rs30,000 but does not exceed Rs50,000 and Rs10,000 for monthly bill over Rs50,000. The business community had expressed serious concerns when the tax was included in electricity bills for the month of July. Therefore, the government had withdrawn it.
Now, the government is contemplating different options for the revenue generation. Officials informed The Nation that International Monetary Fund (IMF) would express its concerns over the aforementioned two decisions, as these would disturb the country’s deficit. Therefore, the government is already working on the mini budget for generating additional revenues to offset the impact of two decisions. The government would likely to promulgate Presidential Ordinance for the mini budget.
The Ministry of Finance and Federal Board of Revenue (FBR) are looking for the avenues for generating additional revenue. The government might put additional burden on the tobacco sector, said an official. However, the recommendations would be finalized in next week.
The relief given to the retailer sector would dent the tax collection of the FBR. The government had set challenging tax collection target for the Federal Board of Revenue (FBR) at Rs7.47 trillion for the ongoing financial year. Tax collection had gone beyond the target in first month of the current fiscal year. The FBR had collected Rs458 billion for July 2022, which has exceeded the target of Rs443 billion by Rs15 billion.