NA gives in to IMF terms passing mini-budget

GST increased to 18pc from 17pc on almost all goods n Finance Minister Ishaq Dar claims additional taxes levied under the bill will help overcome economic crisis.

ISLAMABAD    -   In an endeavour to meet the conditions of International Monetary Fund (IMF) for the re­vival of a much-need­ed loan programme and save the country from ‘default’, the na­tional assembly yester­day approved the Fi­nance Supplementary Bill 2023.

The lower house of parliament passed the mini-budget, intro­duced in the last week, fulfilling another pri­or action of the IMF for reviving the loan pro­gramme for Pakistan.

The amendments passed in the house would further jack up the prices of all com­modities, as GST is in­creased to 18 per cent from 17 per cent on al­most all goods.

The PDM’s govern­ment, in order to com­ply with the directions of the IMF, had made an attempt to approve the amendments with an ordinance but Presi­dent Arif Alvi refused to promulgate it.

With the thin pres­ence of lawmakers, the House yesterday ap­proved some amend­ments to the bill, but rejected the changes proposed by the oppo­sition with majority.

The federal govern­ment last week had pre­sented the Finance Sup­plementary Bill 2023 in the National Assembly after President Dr Arif Alvi refused to promul­gate an ordinance to announce a mini bud­get to fulfil the IMF con­ditions. The IMF had set prior actions for staff level agreement including increasing power and gas pric­es and announcing a mini budget. Following the IMF’s directions, the federal govern­ment has announced new taxation measures worth of Rs170 bil­lion, which would fuel the inflation rate in the country that is already on a higher side.

Finance Minister Ish­aq Dar, concluding the debate on mini-bud­get in the assembly, said that under the mini-budget, a fixed charge of Rs250,000 will be levied on busi­ness class tickets for Canada and Ameri­ca. Tax on a business class ticket to Europe will be Rs150,000 and Rs75,000 for the Mid­dle East. The duty on cigarettes will remain as announced in the bill. He has claimed the additional taxes levied under the bill will lift the country out of the economic crisis.

Dar said that Pakistan held talks with the IMF for 10 days. “We agreed to the IMF on taxes of Rs170 billion in the ne­gotiations,” he said. He claimed that the pre­vious government had broken the financial commitments after vi­olating the agreement with IMF. The Minister said the IMF backed out of the deal when there was a no-confidence motion against then prime minister Imran Khan last year. He briefed that BISP is increasing the stipend by 25 percent and the budget allocated for BISP has been increased from Rs360 billion to Rs400 billion. In the next few days, the Prime Minister will present the plan to reduce government expenditure in the House, he added In the Finance Supplementary Bill, the government has in­creased the standard rate of general sales tax (GST) by one percent to 18 percent. This would enhance the prices of all commodities, as GST is imposed on al­most all goods. Meanwhile, the government has also en­hanced the sales tax on lux­ury items increased from 17 percent to 25 percent. Other measures included increase in Federal Excise Duty on cement increased by 2 percent from Rs1.5/kg to Rs2/kg and enhanc­ing FED on cigarettes, and aerated and sugary drinks. Tax on retail price of bev­erages will be increased by 10%. The government has announced to impose 10 percent withholding tax on marriage halls. The Finance Minister said the Senate Standing Committee on Fi­nance had proposed some amendments related to fed­eral excise duty on air tick­ets to different countries which have been adopt­ed. He expressed satisfac­tion with the performance of the Federal Board of Rev­enue (FBR) and hoped that the revenue collection tar­get set for the year 2022-23 would be achieved easi­ly. The additional proposed tax measures of Rs 170 bil­lion, he added, were not meant to bridge the gap of the collection target, rather the same would help mini­mize the budget deficit for the FY23. He said the IMF was much concerned over the huge losses, such as the power sector was facing losses of around Rs 1,450 billion per year. He said that a total amount of Rs3,000 billion is being spent to gen­erate electricity while the government collects only Rs 1,550 billion. He said that due to power theft, line loss and non-payment of elec­tricity bills, the government was facing about Rs 1450 billion deficit.