Govt presents Rs343 billion mini-budget in Parliament with Rs2 billion taxes on daily use items

ISLAMABAD: The government has presented a mini-budget worth Rs343 billion with the imposition of Rs2 billion taxes on daily use items in the Parliament, a senior official said on Thursday.

The common man will be burdened with Rs2 billion in taxes imposed on computers, sewing machines, iodized salt, spices and match boxes, Federal Finance and Revenue Minister Shaukat Tarin said on Thursday.

After presenting the Finance (Supplementary) Bill, 2021 and the State Bank (Amendment) Bill 2021 in a media briefing, he said that the State Bank of Pakistan (SBP), through amendment, will get autonomy but will remain under the government control.

He said the International Monetary Fund (IMF) wanted the withdrawal of exemptions worth Rs700 billion but after detailed negotiations the Pakistan government reduced it to Rs343 billion.

In the mini-budget, 17 per cent general sales tax has been imposed on the raw materials, whereas the sales tax on the packaging of pharmaceutical products has been withdrawn.

“In my opinion this measure will reduce the prices of medicines because on the packaging level pharmaceutical companies had to differentiate between the sales tax registered and non-registered person or a company, which is no longer necessary. The tax exemptions of Rs60 billion have been withdrawn on imported dairy products, luxury cars, chocolates and other luxury goods, the minister said, adding that the government has not withdrawn the exemptions on the agriculture sector, including pesticides and fertiliser products and machinery.

On this occasion, Federal board of Revenue (FBR) chairman Dr Ashfaq Ahmad admitted that all the bakery products and packed food products, including meat, fruits and vegetables will be taxed.

The finance minister said the increase in taxes on automobiles has nothing to do with the IMF conditions, in fact, the decision has been taken to control the import bill.

The prices of petroleum products, coal, edible oil and steel have almost doubled in the last one year, Tarin said.

“Prior to Covid, the inflation rate in the US was one per cent, which has now reached over 6 per cent. “If President Biden failed, then I also failed,” he said.

Tarin said Turkish President Tayyip Erdogan ignored the corrective measures suggested by the Turkish Central Bank, which pushed Turkey into a deep economic crisis,” he said.

Regarding the amendment in the State Bank (Amendment) Bill 2021, the finance minister said all the appointments in the central bank, including the deputy governors and other senior officials will be made by its non-executive board, which will be nominated by the federal government.

The IMF complained that the State Bank was treated by the previous governments and that’s why autonomy is very necessary. “The Fiscal Monetary Board will be abolished but an informal forum will be formed where the Ministry of Finance and the SBP will discuss their issues related to the economy,” he said, adding that the IMF had already said that immunity to the SBP governor from prosecution is not possible.

Tarin said that if the Parliament or the government in future feel that the autonomy to the central bank compromised the sovereignty of the country it can abolish it with two-thirds majority in the Parliament.

Minister of State for Information and Broadcasting Farrukh Habib said that the Opposition has the right to criticise the government over the IMF programme because the PPP entered in IMF programme nine times, while the PML-N had approached the lending arm four times.

Because of the previous policies and poor governance of these two political parties, the PTI has been forced to approach the IMF, he said, adding that the absence of top leadership of both the parties shows that they hardly care about the problems of the common man.