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ISLAMABAD: The Federal Board of Revenue (FBR) could propose new taxation measures including the possibility of taxing banking profits if it is unable to achieve the revenue target of Rs536.53 billion in November 2022.
The government, however, has no intention to take new taxation measures in near future, reported Business Recorder citing sources. Though, some proposals have been drafted by the FBR which are yet to be approved by the finance minister. If the shortfall continues in November 2022, then there is a strong possibility of new taxation measures including a gradual increase in sales tax on petroleum products.
The Presidential Ordinance is not necessary for the FBR to apply sales tax on petroleum goods. Through the FBR’s announcement, the sales tax rate increase on POL items would be implemented gradually. By alone, this action could produce Rs 60–70 billion in the remaining 2022–2023 term.
When asked about the anticipated financial impact of the new measures, sources responded that the estimate had not yet been completed but would be above Rs60 billion based on the state of revenue collection in November 2022. The new taxing measures could be equal to the anticipated shortfall for the second quarter of 2022–2023 under the proposed Presidential Ordinance.
The FBR has drafted an initial sketch of the proposal to tax banking profits from government securities and foreign exchange earnings. However, it is just an internal proposal and nothing is final in this regard. There are very less chances of finalization of the said proposal drafted by the FBR, the paper reported.
Another proposal is to further raise excise duty on cigarettes through the Presidential Ordinance, but it depends on the revenue collection position in November 2022.
The government has promised the International Monetary Fund (IMF) that it will take emergency measures at the first indication of fiscal program underperformance, including: (i) an immediate increase in the general sales tax (GST) on fuel as a step toward reaching the standard rate of 17 percent; (ii) further streamlining GST exemptions, including sugary drinks (Rs60 billion) and other unjustified exemptions like those that benefit exporters; and/or (iii) raising Federal spending.