ISLAMABAD: The government may impose a flood levy of 1 to 3 percent on all imports through a Presidential Ordinance, keeping in mind exemptions on imports of basic food items and raw medicines, JEE News reported on Wednesday.
The government is also considering imposing a windfall tax on large profits in the banking sector. Profits earned by banks in case of alleged currency manipulation are being distributed by taxation authorities with general revenue to levy additional taxes.
Another proposal to jack up the Capital Value Tax (CVT) on luxury and imported vehicles has been rejected by the government.
The International Monetary Fund (IMF) also opposed an amnesty scheme to regularize vehicles registered in Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) from 2018, when these districts was merged into Khyber Pakhtunkhwa.
Official sources confirmed to JEE News that the State Bank of Pakistan (SBP) has reported a record high profit of Rs 100 billion for commercial banks in the first three quarters (January to September) of the current calendar year 2022, which is Rs. 37 billion in the same period. Last year of 2021.
State Bank data shows that banks earned an additional profit of Rs 63 billion. Hence windfall tax is under consideration to get the due share to the national exchequer.
The Western world slapped on windfall taxes, citing the example of energy companies that made huge profits as a result of the war in Russia and Ukraine, and so did the banking sector in Pakistan.
“We are also looking at the windfall tax very carefully,” said an official, adding that since the super tax litigation is pending in the Supreme Court, the government wants to proceed in a manner that It may not be banned. Courts
“There is also a need to ascertain the exact level of windfall profits apart from the normal increase in banks’ profits,” said the official, who added that the entire additional profit of Rs 63 billion as part of the windfall It will be difficult to declare. Profits of banks
Banks’ windfall profits need to be calculated carefully, so commercial banks are assumed to have earned an additional profit of Rs 50 billion, and this amount should be taxed as windfall tax.
Various prices are under consideration, and the government will finalize the proposal if it gets approval from all relevant forums in the coming days.
The government is likely to issue an ordinance to this effect to satisfy the IMF and pave the way for a staff-level agreement to be reached within the next month.
Finance Minister Ishaq Dar is expected to meet the IMF delegation on the sidelines of the Donors Conference, which will be held in Geneva on January 9, 2023, to announce financial assistance for flood-affected areas in Pakistan. .
On the proposed flood levy, sources said the government will give exemption on import of onions, tomatoes and other essential food items as well as medicines and their raw materials, but the levy will be in the range of 1-3 percent. All other imported items should be slapped.
This revenue initiative will generate 60 billion rupees in the remaining six months of the current financial year.
The Federal Board of Revenue of Pakistan is currently in the process of identifying the sectors that made huge profits in the last financial year like banking and beverages.
It remains to be seen how the government decides to take action to appease the IMF and raise additional tax and non-tax revenue to revive the stalled program.
