ISLAMABAD: The International Monetary Fund (IMF) has recommended that the existing number of excisable goods is excessive and should be abolished on items generating insignificant revenue.

Sources told Business Recorder that the IMF has recommended the Federal Board of Revenue (FBR) to raise excise duty on luxury goods. The FBR should also apply the same rate of excise on all locally manufactured cigarettes, regardless of whether the manufacturer is local or foreign. The FBR should tax e-cigarettes in a similar way to tobacco, given equivalent internality, sources quoted IMF’s recommendation to the FBR.

Sources said that the presently excise duty is levied on a range of goods, including tobacco, aerated drinks, motor cars, cement, telecommunication services, and petroleum and natural gas products.

Pakistan likely to sign staff-level agreement with IMF next week

IMF has recommended rationalising the system of excises, and reducing the spectrum of excises to only those that address negative externalities with respect to health effects and environmental damage, with the level of excises scaled better to the quantified level of externalities. This reform element must take into account the potential revenue losses from eliminating selected excises.

Sources said the excise rates for fuel products and tobacco items were increased substantially particularly those with negative externalities and inelastic demands such as tobacco and fossil fuel, notwithstanding the fact that the present number of excisable goods is excessive and should in the medium term be rationalized to eliminate those that generate insignificant revenue.

Sources said that the government should apply the “DPL tax” to any kind of machinery inputs that pollute and eliminate the accelerated depreciation to alternate energy projects, sources quoted IMF recommendation.

The FBR should increase border control to avoid smuggling of oil derivatives, especially from sensitive areas.

In the medium term, once revenue has increased, reduce the number of items taxed by eliminating excise duty that have none of the following features: (i); Negative externalities; (ii); large revenue potential; (iii); very inelastic demand or luxury aspects, sources said.

The FBR should progressively raise excise duty luxury goods such as yachts, sources referred to the IMF recommendation.

Copyright Business Recorder, 2024


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Az_Iz Mar 20, 2024 03:46am
Raise excise duty on luxury items.Why not. Excise duty should be same regardless of manufacturer being local or foreign.Why not. Wouldn't that encourage FDI.
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Az_Iz Mar 20, 2024 03:49am
Why not significant excise duty on cooking oil also. If you want to consume oily and unhealthy foods, pay more for it.
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Aamir Mar 20, 2024 09:49am
Shame that IMF is micro managing our economy. What have we achieved since independence. Nothing!
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Sumaroo Mar 20, 2024 10:26am
Why not look at out of the Box solutions excluding IMF!
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Dr Khalid Mahmood shouq Mar 20, 2024 11:30am
آئی ایم ایف قرض عیاشی کے لیے نہیں دیتا ملک میں خود کفالت کا چلن پیدا کیا جائے تمام بڑی گاڑیوں کی درآمد بند کریں پٹرول کے اخراجات میں کمی کریں
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Tariq Qurashi Mar 20, 2024 01:19pm
Of all things yachts? Now that is funny :)
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Mohammad Anwar Mar 20, 2024 02:49pm
IMF should Force government to tax Agriculture income ànd elite class people
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Zaryab khan Mar 20, 2024 04:40pm
@Dr Khalid Mahmood shouq , Awesome. That should be the spirit of each and every Pakistani. Absolutely agreed with you Dr Khalid sb
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Saad Mar 20, 2024 04:47pm
It is time to get rid of IMF. 23 times I think we have went to IMF since Independence. What good has it done to us? We must generate our own income and should look to other sources instead of IMF.
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Az_Iz Mar 20, 2024 05:00pm
Tax to Gdp ratio is low.It is unfortunate that IMF has to hold the feet to the fire, to make progress.The gutless politicians will not act on their own.
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Chawla.i Mar 21, 2024 12:37am
Its a big blunder fr our sovereignty that we take such dictation from IMF, dissolve FBR And its not far that our 240miln people will suffer rather control by IMS,its a most coward act of brutality...
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Chawla.i Mar 21, 2024 12:38am
Who d hell r they to dictate us...
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Zalmi Mar 21, 2024 04:45am
IMF is running this country and sucking our people dry while our politicians gets richer everyday looting those funds. IMF should at least keep a tight check on where the lender money is being used
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Jawad Mar 21, 2024 02:39pm
@Az_Iz, why do we allow smuggling.....we must stop ....thats the only solution
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musbahalfarah Mar 21, 2024 02:49pm
@Aamir , If we are borrowing money, we have to show that we are managing the economy to be able to payback. It's a shame that even common sense doesn't prevail in our economic policy.
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musbahalfarah Mar 21, 2024 02:54pm
Even a medium sized business considers all these aspects what have been identified by IMF. It's a shame that due to lack of meritocracy, lenders are teaching us economic policies.
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Awais Mar 21, 2024 06:06pm
@Dr Khalid Mahmood shouq , good
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Aurangzeb Mar 21, 2024 07:38pm
All the white elephants like WAPDA, Railway, steel mills, utility stores, must be handover to private sectors.
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Sunny Mar 21, 2024 08:07pm
Pakistan government must support Industries and Export otherwise Pakistan can not survive.
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Abid Mar 21, 2024 08:28pm
@Saad, the imf amd the west get their loaning the money to corrupt politicians who sell everything off whata sad state of affairs
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Ameer Hamza Mar 21, 2024 11:15pm
@Zalmi, IMF doesn’t help; it destroys all semblance of normality in society m. IMF never agrees on raising education standards but they give loans to only preferred dacoits masquerading as Politician
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bakhtiar Mar 21, 2024 11:48pm
why imf not putting any cut on non development funds like fuel,luxury vrgicles,free energy and salaries of the elite class.gas prices increased 500% and electricity by 400%.the have crushed poor masse
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Misbah ud din Mar 22, 2024 09:23am
I will want to make doctor
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Aam Aadmi Mar 22, 2024 09:43am
Beggars cannot be the choosers. IMF is not to blame. Ghalib says:- Wo apni khoo na chorain gay, hum apni wazah kyun badlain Subak sir bun k kehte ho k hum SE sargran kyun ho
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