Finance Minister Ishaq Dar on Wednesday introduced the Finance (Supplementary) Bill 2023, featuring fiscal measures of Rs. 170 billion through additional taxes as agreed with the International Monetary Fund (IMF).
Addressing the lower house of parliament, the finance minister compared the performance of the previous Pakistan Muslim League Nawaz (PMLN) and Pakistan Tehreek-e-Insaf (PTI) governments. He criticized the PTI government for significantly increasing the country’s debts.
Addressing the national assembly session, the finance minister said that the government has only imposed those taxes that would have minimum impact on the poor. He highlighted that the government is not imposing any taxes on items of daily use.
The government was forced to head to parliament after President Dr Arif Alvi advised the government to take the parliament into confidence on the issue of raising additional revenue through taxes.
Key points of tax amendment bill
- General sales tax (GST) on luxury items to go up to 25 percent from the previous 17 percent
- Federal Excise Duty (FED) on club class, first class, and business class airline tickets to be increased to 20 percent or 50,000 (whichever is higher)
- 10 percent Withholding Adjustable Advance Income Tax on wedding halls
- Increase in FED on sugary and aerated drinks
- FED on cement to be increased from Rs. 1.5 per kg to Rs. 2 per kg
- GST to be increased from 17 percent to 18 percent
The finance minister announced that the cash stipend under the Benazir Income Support Programme (BISP) would be increased for which the government is allocating Rs. 40 billion.
He mentioned that the government is formulating a package for the lower-income classes to help them financially.
Cabinet to adopt ‘simplicity’
Dar said that the prime minister has decided that he, along with the federal cabinet, will adopt ‘simplicity’ and will encourage the public to do the same. He said that the prime minister will soon take the public into confidence in this regard.
Way forward
The finance minister said that Pakistan’s economy has two major problems i.e. the fiscal deficit and current account deficit. He said that the government is working to reduce both.
Dar said that the IMF program will help boost the country’s forex reserves, the rupee will strengthen and exports and remittances will also increase. The minister also claimed that the issue of letters of credit (LCs) will be resolved soon.
Sectoral reforms
He said that apart from the macroeconomic initiatives, the government is also working on sectoral reforms. He highlighted the Kissan Package announced by the premier recently as a step in this direction.
He also highlighted the incentives announced for the IT and IT Enabled Services sector and said that they will help address the problems being faced by the sector.
