The government is planning to impose wealth tax on moveable assets to control the country’s budget deficit, and this might raise custom duties even further on more than 5200 tariff lines.
According to the Finance Ministry, the current government aims to reduce imports to encourage in-house production and to help the local industry thrive. To do that, the current age limit of three years for cars and five years for jeeps might get reduced to two years and three years respectively.
Other than that, over 900 items have also been considered for a regulatory duty increment including mobile phones, and a number of other items. such as cigarettes, might also see a price hike due to taxes in the coming days.
However, a potential wealth tax that is expected to be at a rate of 2 or 3 percent on more than 5,200 tariff lines will make a much higher impact, as its estimated to generate more than Rs. 40 billion in tax revenue for the government. The current custom duty on these tariffs stands at 20%, if the new duty is added, the rate can go up to 23%.
The ministry says that these changes, if implemented, will reduce the budget deficit from Rs. 2.3 trillion to Rs. 2 trillion. Taxes on vehicles and other listed items are being increased mainly to contain the out-of-hand budget deficit that is a remnant of poor economic control, rising imports, and ineffective taxation in the past.
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In order to curb this menace, the finance ministry is likely to impose a number of different taxes. Other than tax increase, the government is also working to cut costs on schemes and development programs started by the previous government.
For example, the current budget for the approved Public Sector Development Program of Rs. 800 billion can be brought down to Rs. 660 billion. Additionally, the ministry believes that revenue collection should be about 0.7% of GDP at Rs. 260 billion.
To counter the massive budget deficit, income tax reliefs and rates might also be changed. The finance minister, according to sources, also proposed halving the current limit of exempt income of Rs. 1.2 million. This can add Rs. 75 billion to the total tax revenue, as more people become liable for their income.
It is unlikely that prices for various items, especially imported ones, will be reduced during the current government’s tenure.
PTI is working in wrong direction. If import items will be banned for import then WTO will ban export of Pakistan to various countries. PTI must avoid to add further regulatory duty on any good items regardless of its nature.
I did not see any mention of banning the imported items,, instead of increasing the current custom duties/ sales tax an additional “Wealth Tax” pandora is being planned. But I will agree with you in the direction of the govt part. In order to reduce the trade deficit there should be incentives provided to the local industry,, but each time we get price hikes in utilities, our products become more un-competitive. Our neighbor competitors are provided special subsidies on utilities for export based firms, we should also adopt this approach.
what did I miss? What are they banning?
There is no mention of banning any item in the above article, just the duties are being increased, rather introduction of new Wealth Tax in effort to bring down imported items figure.
??????? naya Pakistan.
Tabdeeli aayi re…..
Should’ve bring back looted money to Pakistan and educate people to buy ‘National’ products (after creating quality products).