ISLAMABAD: Pakistan’s finance minister Ishaq Dar is scheduled to present a supplementary finance bill in parliament today, Wednesday, after the federal cabinet approved increasing general sales tax by one percent and levied additional taxes on luxury items, state-run APP reported.
The measures are part of a reform agenda Pakistan has to fulfill to unlock the latest tranche of a bailout program from the International Monetary Fund.
According to a statement released by the Prime Minister’s Office, the decision to increase taxes was taken after the cabinet received a briefing on economic reforms under the ninth review of a $7 billion IMF program. Pakistan desperately needs external financing amid its dwindling dollar reserves and a rapidly depreciating national currency.
“The federal cabinet on Tuesday approved the Finance Supplementary Bill 2023 providing for a 1 percent increase in general sales tax and additional taxes on luxury items as part of the reforms related to the International Monetary Fund’s Ninth Review,” state-run APP reported.
The supplementary finance bill will now be tabled before parliament as President Dr. Arif Alvi has summoned sessions of the National Assembly and Senate.
“All effort must be made to put minimum burden on the low-income segments of the society,” APP quoted Prime Minister Shehbaz Sharif as saying at the cabinet meeting. “Immediate steps should also be taken to increase tax on luxury items.”
The PM issued directives to his economic team not to tax daily use items amid rising inflation which is at a multi-decade high in Pakistan. He highlighted the importance of embracing austerity at the governmental level and said a policy in this regard would be announced soon.
