President Arif Alvi has approved the Finance (Supplemental) Bill, 2023, potentially bringing Pakistan closer to the staff-level agreement (SLA) with the International Monetary Fund (IMF) to avoid default.
The approval was granted under Article 75(1) of the Constitution, which states that when a bill is presented to the president for assent, the President must assent to the bill within 10 days.
The National Assembly recently approved the supplementary bill with some tweaks, bringing Pakistan closer to the IMF SLA but at the expense of dropping a massive inflation bomb on the population.
The budget was approved by a majority vote in the lower house of parliament. Today’s nod by the President has in principle activated the Rs. 170 billion in new taxation measures.
Finance (Supplementary) Act, 2023 has enforced the additional taxation measures across Pakistan including raise in the Federal Excise Duty on business class and club class air tickets and a raise of the FED on beverages and juices. The FED has been enhanced on sugary and aerated drinks, while FED has also been increased on cement.
According to the Act, the general sales tax (GST) has been increased from 17 to 18 percent. It has been decided to enhance the GST on luxury items from 17 to 25 percent.
Although the president had not given his blessings to the bill after it was passed by the National Assembly on Wednesday, the majority of the taxation measures had already been implemented.
Pertinently, the IMF has shown a low tolerance for Pakistan for deviations from its program targets and the latest mini-budget exercise is expected to change things in that regard.
