Govt to Impose Flood Levy on Luxury Goods to Fund Reconstruction

The federal government is preparing to issue a Flood Levy Ordinance to raise funds for the rehabilitation of flood-hit communities and the rebuilding of damaged infrastructure across Pakistan, sources told ProPakistani.

Sources confirmed that the Ministry of Law and Justice has forwarded the draft ordinance to President Asif Ali Zardari for approval. 

Once signed, the new levy will take effect immediately and empower the government to collect additional charges on imported and locally produced luxury goods.

The proposed measures include a special tax on high-end electronic items and an extra Rs. 50 charge on every packet of cigarettes, regardless of brand or price.

Officials said the government is also reviewing regulatory duties on imported vehicles and other luxury items, with the goal of generating over Rs. 50 billion for the national flood relief and reconstruction fund.

Sources, however, indicated that the plan could face legal complications, as funds raised through such levies may not be easily transferred to provinces under the existing fiscal arrangements.

According to a Planning Commission report, Pakistan’s recent monsoon floods caused total losses of Rs. 822 billion ($2.9 billion). 

The agriculture sector alone suffered over Rs. 430 billion in damages, while infrastructure losses were estimated at Rs. 307 billion.

The disaster also claimed more than 1,000 lives and damaged 229,000 homes, in addition to 2,811 kilometres of roads and 790 bridges, cutting off vital transport routes across multiple provinces.

The move comes as Pakistan faces a fragile economic recovery. The International Monetary Fund (IMF) in its October 2025 World Economic Outlook projected the country’s growth rate at 3.6 percent for FY26, while warning of rising inflation and a widening current account deficit.

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