Pakistan must raise an extra $379 million (about Rs40 billion) through new tax measures, Finance Minister Ishaq Dar said on Monday, as the government seeks to qualify for its latest IMF loan tranche.
Earlier this month, the IMF approved the release in December of a $502 million tranche of Pakistan´s three-year $6.68 billion programme, even though the government missed targets for tax revenue generation, net domestic assets and the budget deficit.
Dar also said that the government had decided to maintain prices of petrol and diesel at the present level.
Addressing a news conference, the finance minister announced five to ten per cent regulatory duty on sixty one imported non-essential luxury items. He said five per cent regulatory duty increase will be made on 289 imported items.
The minister said one per cent additional custom duty will be imposed on the imported items. He said that non-dutiable imports will remain exempted from the duties. He said there will be no custom duty on 25 imported items including raw material, fertilizer and heavy machinery.
He also announced increase in tax on the import of old and used vehicles over 1000 CC. Dar said that increase in duties has been made to meet shortfall in revenue.
“We have kept in mind not to increase duties that would make items more expensive for the common man,” he said.
Separate increased taxes were also announced on imported automobiles – both new and used – and domestically-produced cigarettes.
In its last review, the International Monetary Fund had warned that the release of December´s approved $502 million tranche depended on the announcement of new measures to generate an extra 40 billion Pakistan rupees ($380 million) in revenue.
“This was a deadline in a sense, and if the government didn´t do it the next tranche of the programme would at least be delayed, if not suspended,” Khurram Husain, an economic analyst and journalist, told Reuters.
It was unclear if the new measures would meet the target.
Dar had earlier told a parliamentary standing committee that the increased duties were meant to restrict Pakistan´s import bill, not increase revenue.
Husain said if the measures did not raise enough funds, the government would have to raise taxes on staples such as electricity and petrol.