The government has delayed the promulgation of the Presidential Ordinance to bring a mini-budget by imposing a 3 percent flood levy on imports and tax on banks’ foreign exchange income.
Highly placed government officials told ProPakistani on Monday that the work on the said Ordinance has been temporarily stopped at the level of the Federal Board of Revenue (FBR).
The initial draft of the Presidential Ordinance was prepared to incorporate proposals of a 3 percent flood levy on imports and tax on banks’ foreign exchange income. However, there is no further development on the said Ordinance. Moreover, the Ordinance cannot be promulgated during the ongoing National Assembly session.
The FBR has repeatedly requested the government to impose a 17 percent sales tax on petroleum products to generate additional revenue equivalent to the amount of projected revenue of Rs. 60 billion through the promulgation of the Ordinance. The FBR can easily impose sales tax through a notification and can avoid mini-budget. However, the FBR has been unable to get the approval of Finance Minister Ishaq Dar to impose a sales tax on petroleum products. So far, there is no go-ahead signal from the decision makers to finalize the ordinance for promulgation.
In November 2022, the Economic Coordination Committee (ECC) of the Cabinet deferred the Federal Board of Revenue’s proposal seeking the imposition of a 17 percent sales tax on High Octane Blending Component (HOBC) and RON-97.
The FBR expects to collect Rs. 7,300 billion by the end of 2022-23 against the assigned target of Rs. 7,470 billion for the ongoing fiscal year.
The customs duty collection witnessed a major decrease during the first half (July-Dec) of 2022-23 due to the import compression. The FBR’s Inland Revenue has estimated that they would be able to achieve the assigned tax collection target in the second half (Jan-June) period of the current fiscal year, so the income tax, sales tax, and federal excise duty (FED) related targets would remain intact.
