- Finance Minister Ishaq Dar says bill proposed to minimise fiscal deficit
ISLAMABAD: The National Assembly Monday passed the Finance (Supplementary) Bill, 2023, proposing additional taxes and duties of Rs170 billion to meet the understanding reached with the International Monetary Fund for Extended Fund Facility.
In his winding-up speech, Finance Minister Ishaq Dar said the bill proposed to impose new taxes of Rs170 billion to minimise the fiscal deficit.
He said his economic team had a hectic routine during the last 10 days and it held talks with the IMF to revive the programme, during which it agreed to take some tough decisions for streamlining the deteriorating condition of the economy.
“The additional proposed tax measures of Rs170 billion was not meant to bridge the gap of the collection target rather it will help minimise the budget deficit for the fiscal year 2023,” he added.
He said a fixed charge of Rs250,000 will be levied on business class tickets for Canada and America, adding that the tax on a business class ticket to Europe will be Rs150,000 and Rs75,000 for the Middle East and Africa.
The duty on cigarettes will remain as announced in the bill, he said, adding that additional taxes levied under the bill will lift the country out of the economic crisis.
“Excise duty has been increased on passengers traveling internationally in business class,” he added.
“A duty of Rs250,000 has been fixed on business class tickets for South America. Also, the charge for business and first class air tickets for passengers going to East Central Asia and Asia Pacific countries will be fixed at Rs150,000,” Dar added.
He said line losses in the power sector due to electricity theft are Rs1,400 billion, adding the cost of generating electricity is Rs3,000 billion, while the government collects only Rs1,550 billion.
He also assured the house, Federal Board of Revenue (FBR) will meet its revenue targets.
Dar said Pakistan held talks with the IMF visiting team for 10 days, adding “we agreed with the IMF on taxes of Rs170 billion during the negotiations”.
He claimed the previous government reneged on the financial commitments with IMF, adding the monthly stipend under Benazir Income Support Programme (BISP) is being increased by 25 per cent and the budget allocated for the programme from Rs360 billion to Rs400 billion. In the next few days, he added, the prime minister will present a plan in the house to reduce government expenditures.
Dar also criticised the “flawed” economic policies of the previous government, saying the mismanagement and lack of fiscal discipline damaged the economy.
He said that the PTI government did not fulfill its commitments made with IMF and sabotaged the economy before its ouster.
“It was the obligation of the state to honour the agreement signed with IMF so the incumbent government was implementing the point agreed by PTI government,” he claimed.
He said that the debt has increased by 70pc during the last four years, adding most of the new taxes were being imposed on luxury items not used by them.
Dar said that the government fully realises people’s problems due to rising inflation, but are compelled to take tough measures to strengthen the economy.
According to the bill, the general sales tax (GST) will be increased from 17 to 18 per cent. It has been decided to enhance the GST on luxury items from 17 to 25 per cent.
For the air travel, it has been proposed that a fixed amount of FED ranging from Rs250,000 to Rs75,000 of different tiers as per the International Air Transport Association on airfare for first, business and club classes should be imposed.
Besides, 10 per cent withholding adjustable advance tax will be levied on the bills of wedding halls in order to promote simplicity and austerity. The FED will be enhanced on sugary and aerated drinks, while FED will be increased on cement from 1.5 rupees to two rupees per kilogrammes.
This was opposed by Maulana Abdul Akber Chitrali of Jamaat-e-Islami and Saira Bano of Grand Democratic Alliance (GDA) after the amendments moved by them were rejected.
However, two recommendations forwarded by Senate were incorporated into the bill by the house.
The National Commission for Minorities Bill, 2023 was laid before the House. The bill was introduced by Finance Minister Ishaq Dar.
Copyright Business Recorder, 2023