New Delhi: After accepting International Monetary Fund’s (IMF) demands to resume stalled loan plan, Pakistan has prepared two draft ordinances to impose Rs 200 billion in new taxes. The drafts are aimed at dealing with the country’s worst economic crisis after it accepted IMF terms in seeking loans.
The two draft ordinances are related to the imposition of Rs 100 billion in taxes and a Rs 100 billion flood levy on imports, reported Pakistan-based publication Dawn. “We have prepared both ordinances,” the report quoted a tax official as saying, who added that are chances of an increase in withholding tax rates and regulatory duty on luxury items.
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Apart from this, the massive devaluation of the rupee in the outgoing week may also help to generate additional revenue for the Federal Board of Revenue (FBR).
The report said the flood levy, to be collected by the FBR during the import stage, will be diverted to bridge a shortfall in the petroleum development levy (PDL).
The IMF directed the finance ministry to raise this levy to Rs 50 per litre on petrol and diesel from the present Rs 35 after it estimated a shortfall of Rs 300 billion under the PDL.
This decision is expected to be taken in the next review of petroleum prices on Jan 31, the source said adding that it could result in Rs20 to Rs40 per-litre hike in petroleum prices.
Meanwhile, the IMF team is likely to reach Islamabad on Tuesday for talks after Pakistan Prime Minister Shehbaz Sharif offered assurance in implementing the policy measures that didn’t get implemented for almost four months owing to political reasons as they could have fuelled already-high inflation. However, the government had to accept IMF conditions after the lender didn’t budge.
The government is also mulling discontinuing the power sector subsidy and unleashing sales tax on raw materials for the export sector, especially textile industrialists — measures that can ruffle the feathers of the PML-N’s core constituency in an election year, Dwan reported citing its sources.