PESHAWAR: The Federal Cabinet on Thursday, chaired by Prime Minister Imran Khan, approved mini-budget, on the direction of International Monitory (IMF) to secure $1 billion loan tranche.
Under the mini-budget, the government has planned to increase sales tax on about 150 items. According to reports, income tax on mobile phone calls is proposed to be increased from 10 to 15 percent, sales tax on vehicles larger than 850 cc has been increased by 17 percent. In addition, it is proposed to increase tax on the import of duty on electric vehicles from 5% to 17%.
Read more:
Mini budget: hike expected in petroleum products
Federal cabinet to approve mini-budget today
Hike expected in petroleum products, phone prices
For the first time, 17% sales tax has been imposed on duty free shops, 17% GST have been proposed on bakeries, restaurants and food chains. However, tax exemption on bread and chapatti will remain intact. Similarly, stationery, packaged food items, imported baby milk, butter, cheese, dairy products including cream, imported vegetables, bakery items would see price-hike. In addition, there is a proposal to levy 10% holding tax on items in the IT sector, including computers and tablets.
As a result of the mini-budget, the government has planned to increase the annual tax generation from Rs5, 800 billion to Rs6, 100 billion. Moreover, reduction of Rs200 billion in the annual development budget is also proposed.
After the passage of mini-budget, some items like imported fully manufactured and luxury vehicles, will see price-hike. According to the economists, if one has to import a car worth Rs20 million, its value will also increase by Rs1 million after the passage of mini-budget. Economists are of the view that the middle class will be affected by this mini-budget while the affluent class will not be affected by it.
The PML-Q had assured support to the PTI government after the cabinet approved mini-budget while the Muttahida Qaumi Movement (MQM) had opposed the imposition of taxes and termed the mini-budget as “a wake-up call”.
On the other hand, under the State Bank of Pakistan Amendment Bill-2021, a plan is being considered to grant more autonomy to the central bank, after which the federal government or any government agency will not be able to get loan from SBP and thus the government will rely on commercial banks. After approval by the Cabinet, both the amendment bills will be introduced in the National Assembly.
The opposition political parties vowed to block the passage of mini-budget. Addressing the National Assembly, the Pakistan Muslim League-Nawaz (PML-N) leader Khawaja Asif said that mini-budget bill surrender Pakistan to the IMF. He added that it will usher a new wave of inflation and unemployment in Pakistan which is already reeling under unemployment, inflation and gas crisis.