Pakistan to impose Rs170 billion in additional taxes as finance bill approved by president 

A man looks at rice prices at a market in Karachi on February 3, 2023. (Photo courtesy: AFP/FILE)
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Updated 23 February 2023
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Pakistan to impose Rs170 billion in additional taxes as finance bill approved by president 

  • Move is part of meeting IMF conditions to unlock economic bailout Pakistan needs to avoid the risk of default
  • Government has already jacked up prices of petroleum products, natural gas and electricity to fulfill IMF prior actions

ISLAMABAD: Pakistan will be able to collect additional taxes worth Rs170 billion after President Dr. Arif Alvi on Thursday approved the Finance Supplementary Bill 2023, fulfilling a major prior condition for the signing of a staff-level-agreement with the International Monetary Fund (IMF) to revive a stalled $7 billion bailout program.

The IMF had asked Pakistan to raise an additional Rs170 billion through tax revenue, with the bulk of tax measures worth Rs115 billion implemented from February 14 through Statutory Regulatory Orders (SROs). Now, with the president’s formal assent to the new finance bill, or mini budget, the remaining Rs55 billion tax measures will also come into effect.

Pakistan has been struggling to reach a deal with the global lender to receive the $1.1 billion tranche of a package signed in 2019. Discussions in Islamabad from January 31 to February 9 this year ended without the signing of a staff-level agreement but virtual discussions are continuing and the IMF has continued to push Islamabad to fulfil more ‘prior actions,’ including the collection of additional revenues to revive the deal.

The government has already jacked up the prices of petroleum products, natural gas and electricity to meet the global lender’s defined prior actions for the deal.

“President Dr. Arif Alvi has approved the Finance (Supplementary) Bill 2023. The approval was given under Article 75 of the Constitution,” the President’s House announced in a Twitter post.
 


Through the new legislation, the government has increased General Sales Tax (GST) on all luxury items from 17 to 25 percent, imposed a fixed tax on all business and first class air travel ranging from Rs75,000 to Rs250,000 and a 10 percent withholding tax on marriage halls, as well as raised federal excise duty on cement from Rs1.5 to Rs2 per kilogram. 

Pakistan is in dire need of funds as it battles a worsening economic crisis, with foreign exchange reserves falling to around $3 billion, barely enough to cover three weeks of controlled imports. An agreement with the IMF would not only release an over $1.1 billion loan but also unlock other avenues of funding for Pakistan.

On Wednesday, Commerce minister Syed Naveed Qamar said during a visit to Washington he was hopeful for the resumption of the loan program “as early as this week.”
 

 

 


Pakistan beefs up security in Karachi, Islamabad and Skardu as Khamenei protests kill 24

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Pakistan beefs up security in Karachi, Islamabad and Skardu as Khamenei protests kill 24

  • At least 14 killed in northern Gilgit-Baltistan region, 10 in Karachi during Sunday’s clashes between protesters, law enforcers
  • Police close off roads leading to key government buildings in Islamabad, US consulate in Karachi with army deployed in Skardu

ISLAMABAD/GILGIT: Authorities beefed up security by deploying additional police contingents and sealing off most roads leading to government buildings in Islamabad, Karachi and Skardu on Monday after violent protests in the aftermath of Iranian Supreme Leader Ayatollah Ali Khamenei’s killing led to the deaths of at least 24 people in Pakistan. 

At least 10 people were killed and 73 others sustained injuries on Sunday in clashes with law enforcement outside the US consulate in Karachi. Hundreds of protesters had gathered outside the consulate, with videos showing angry crowds armed with sticks as they smashed doors and windows.

In Islamabad, protesters entered the Red Zone which houses key government and diplomatic offices in the capital, prompting authorities to fire tear gas to disperse them. Similarly, people gathered outside the press club in the northwestern city of Peshawar to protest Khamenei’s killing as well.

Skardu in Pakistan’s northern Gilgit-Baltistan (GB) region saw violent clashes on Sunday as well, as protesters set fire to and vandalized several buildings, including United Nations (UN) regional offices. Clashes with law enforcers caused the deaths of at least 14 people in the region, among them a soldier, a senior official told Arab News.

“Seven protesters were killed in Gilgit and seven in Skardu,” GB Caretaker Information Minister Ghulam Abbas confirmed. “One was soldier martyred in Skardu while the injured there were around 50.”

The minister said the station house officer and deputy superintendent of police in Skardu were also injured, along with two soldiers, while 10 properties were damaged in the clashes. He said police have registered complaints against the culprits for the violence. 

“Schools are closed on Monday and courts’ activities will also be closed,” Abbas said. “A curfew has also been imposed for three days initially in Skardu and Gilgit cities from Mar. 2 to Mar. 4.”

The flare-up also prompted authorities to call in the army in Skardu under Article 245 of the Pakistani constitution, state media reported on Sunday.

Meanwhile, Islamabad Traffic Police said entry into the Red Zone area will remain open for people only through the Margalla Road and another route through Marriott Hotel.

“All other entry points leading toward the Red Zone will remain closed,” it said in its advisory. 

A spokesperson for the Karachi Traffic Police said in a press release that the MT Khan Road, from PIDC road to the Mai Kolachi Road railway crossing, will remain closed on Monday for general traffic due to security reasons.

The US consulate, which was the scene of clashes between protesters and police, is located on Mai Kolachi Road near MT Khan and PIDC. 

“The general public is requested to cooperate with law enforcement agencies and traffic police to avoid inconvenience and difficulties,” the Karachi Traffic Police spokesperson said. 

MIDDLE EAST TENSIONS

The violence on Sunday came hours after Iranian authorities confirmed Khamenei was killed in coordinated strikes carried out by the US and Israel, dramatically escalating tensions in the Middle East and triggering protests in several countries.

According to US officials, the operation targeted Revolutionary Guard command facilities, air defense systems, missile and drone launch sites, and military airfields. The US military said it suffered no casualties and reported minimal damage to its bases despite what it described as “hundreds of Iranian missile and drone attacks.”

Iran retaliated by launching missiles and drones toward Israel and targeting US military installations in Bahrain, Kuwait, Qatar and the UAE. The Emirati government said its air defense systems intercepted dozens of Iranian missiles and drones, but debris from the interceptions caused material damage in Abu Dhabi and Dubai, and at least one civilian, a Pakistani national, was killed. It issued rare emergency alerts urging residents to seek shelter, underscoring how the conflict has rippled far beyond Iran’s borders.

The Israeli military said dozens of Iranian missiles were fired toward Israeli territory, many of which were intercepted. Israel’s Magen David Adom rescue service said a woman in the Tel Aviv area died after being wounded in a missile strike.