The federal government has begun preparations to present a mini-budget worth more than Rs40 billion in order to meet the tax collection target and meet the IMF’s preconditions for the release of two IMF tranches worth $1.17 billion.
According to FBR sources, the government intends to levy taxes on the fertilizer, sugar, and textile industries, and that an amendment to the finance bill will be made through a presidential ordinance before the Executive Board meeting of the Washington-based lender.
The FBR’s Inland Revenue wing was preparing outlines and proposals for the mini-budget after the government had to reverse its decision to impose fixed taxes on retailers, which had resulted in losses of Rs40 billion, according to sources.
“The government intends to tax multiple sectors in order to collect Rs30 billion for Pakistan State Oil (PSO),” the sources added, adding that the move was part of the government’s efforts to keep the PSO from going bankrupt.
In this regard, the Cabinet’s Economic Coordination Committee directed the Petroleum Division to collaborate closely with the Oil and Gas Regulatory Authority in order to meet this additional financing.
“More taxes will be imposed on four major sectors as a result of a finance bill amendment,” they said.
“The abolition of the tax has resulted in a loss of Rs40 billion in revenue,” the sources said, adding that the tax had been delayed until October and that beginning in November, a new mechanism for collecting taxes from retailers would be proposed.