Imports taxed to collect Rs40 billion

ISLAMABAD: In a mini-budget unveiled to fetch Rs40 billion taxes under the International Monetary Fund (IMF)’s conditions, the government on Monday imposed one percent additional Customs duty by raising the maximum slab from 20 to 21 percent, enhanced and imposed Regulatory Duty on 350 imported items, hiked rates for cigarettes, and raised fixed duty on used and old imported cars.
The imposition of one percent hike in Customs duty (CD) on all imported products except exempted items will alone yield additional revenues to the tune of Rs21 billion in the remaining seven-month (Dec-June) period of the current fiscal year. This additional duty of one percent will be effective on all PTAs and FTAs signed by Pakistan with other countries.
The government has taken additional tax measures to bridge the shortfall of Rs40 billion in order to achieve the highly ambitious tax collection target of the Federal Board of Revenue (FBR) to the tune of Rs3,104 billion for the whole financial year 2015-16.
“The ECC has approved additional revenue measures by raising taxes on the rich, and discouraging imports of luxury items. We have raised tax rates on the basis of one principle with the consent of Prime Minister Nawaz Sharif that it should not negatively impact common man of this country,” Finance Minister Ishaq Dar announced tax measures after getting approval from the Economic Coordination Committee (ECC) along with FBR Chairman Nisar Mohammad Khan here on Monday evening.
However, former foreign minister of PPP-led government Hina Rabbani Khar, while talking to The News, severely criticised ‘flawed policies’ pursued by the current government and said that the wrong exchange rate policy evaporated benefits of reduction in oil import bill that ultimately caused higher imports. “How crazy is this step that the government has now imposed additional 40 billion rupees taxes to rectify its wrong exchange rate policy for discouraging imports,” she said and added that Pakistan’s industrial output remained at 27 percent, less competitive than India because of flawed real effective exchange rate (REER). India is increasing liquidity for its private sector but here the FBR under policy directive is asked to hold up refunds, she maintained.
In order to generate Rs40 billion in the remaining seven months of the current fiscal year, Dar said, the FBR estimated to collect Rs4.5 billion through imposition of Regulatory duty (RD) on new 61 imported items in the range of 5 to 10 percent, enhancing RD on 289 imported items by 5 percent to collect Rs4.5 billion, raising rates of Federal Excise Duty on cigarettes in the range of Rs125 and Rs100 on high tier and low tier to generate Rs6.5 billion, additional one percent Customs duty across the board except the exempted items to raise Rs21 billion and imported used and old cars to generate Rs2.5 billion.
On import of old and used cars, the minister said that the fixed duty rate for old and used cars would remain unchanged for 800cc and 1,000cc cars with existing rate of $4,800 and $5,000 respectively.
The fixed duty rate for all higher capacity cars in category of old and used has been increased by 10 percent as the duty rate for 1,001cc to 1,300cc was raised from $12,000 to $13,200, 1,301cc to 1,500cc from $16,980 to $18,590, 1,501cc to 1,600cc from $20,500 to $22,550 and 1,601cc to 1,800cc from $25,400 to $27,940 with immediate effect.
On cigarettes, the Federal Excise Duty was increased on higher tier brands from Rs3,031 per 1,000 cigarettes to Rs3,155 per thousand, while on lower tier brands the FED rate was increased from Rs1,320 to Rs1,420.
The exempted items from one percent raise on Customs duty slab included all non-dutiable imports: agriculture machinery; essential raw material and agri inputs; raw material, components for local industry for 25 sectors, for example leather, pesticides, sugar, fans, flat rolling steel industry and electric motors; on import of which the concession in Customs duty is allowed under SRO 565 (1) 2006. The exempted items from one percent additional CD (Customs duty) also included import of fertilisers, seeds and spores of sowing, plant and machinery for manufacturing goods, import of used vehicles, import of goods on which Regulatory duty (RD) is already imposed under SRO 577 (1) 2005 and import of goods on which the RD is already imposed under SRO 568 (1) 2014, telecom sector and import of used cars.
The FBR has imposed 5 to 10 percent RD on new 61 imported items on which the CD was already imposed. The government slapped 10 percent RD on live poultry; fish fillets and other fish meat; coconuts, Brazil nuts and cashew nuts, fresh or dried; almonds; prepared or preserved meat, meat offal or blood; cocoa paste; cocoa butter, fat and oil; cocoa powder, not containing added sugar; ground-nuts, other mixtures; pineapples; citrus fruit; pears; apricots; cherries; peaches, including nectarines; strawberries; palm hearts; essences and concentrates, of coffee, tea or mate and preparations; trunks, suit-cases, vanity-cases, executive-cases, briefcases etc; apparel and clothing accessories of leather; waterproof footwear; other footwear with outer soles and uppers of rubber or plastics; footwear with outer soles of rubber, plastics leather or composition leather and uppers of leather; footwear with outer soles of rubber, plastics, leather; other footwear; parts of footwear; glass beads, imitation pearls, imitation precious or semi-precious stones; imitation jewellery; wrist-watches, pocket watches and other watches; video games; articles and equipment for general physical exercise, gymnastics, athletics; brooms, brushes; diapers for infants and babies.
Five percent RD has been imposed on sanitary towels and tampons; men’s or boys overcoats, car-coats, capes, cloaks; women’s or girls overcoats, car-coats, capes, cloaks; men’s or boy’s suits, ensembles, jackets; women’s or girls, suits ensembles, jacket, blazers, dresses, skirts, divided skirts, trousers etc; men’s or boys shirts; women’s or girl’s blouses, shirts and shirt-blouses; men’s or boys, singlets and other vests, underpants, briefs, nightshirts, pyjamas; women’s or girls singlets and other vests, slips, petticoats, brief, panties, nightdresses, pyjamas; babies garments and clothing accessories; garments, made up of fabrics; track suits, ski suits and swimwear; brassieres, girdles, corsets, braces, suspenders, garters and similar articles; handkerchiefs; shawls, scarves, mufflers, mantillas, veils and the like; ties, bow ties and cravats; other made-up clothing accessories; bed linen, table linen, toilet linen and kitchen linen; curtains and interior blinds; other furnishing articles; sacks and bags; tarpaulins, awnings and sunblinds, tents; other made-up articles, including dress patterns; sets consisting of woven fabric and yarn; and used or new rags, scrap, twine, cordage, rope.
The FBR has increased the RD on 289 imported items by five percent from existing rate of 10 percent to 15 percent. The FBR increased RD on Yogurt from 10 percent to 15 percent, others, butter, dairy spreads, cheese, curd, grated or powdered cheese, processed cheese, blue veined cheese, natural honey, figs, pineapples, avocados, guavas, mangoes, frozen mangoes, mangoesteens, mango pulp, oranges, kinos, grapefruit including pomelos, lemon (citrus lemon), watermelons, papaws, apples, pears, quinces, apricot, sour cherries, peaches, plump and sloes, strawberries, raspberries, kiwifruit, durians, pine nuts, chewing gum, and white chocolate, containing eggs.
Under SRO 568 (1) 2014, the FBR imposed additional RD on all items. Working on SRO 568(I)/2014 (RD on luxury/ non-essential goods) (excluding cotton yarn, grey & processed fabric, blankets and iron & steel sector). Besides existing 10% RD, five percent additional RD was imposed on persimmons; pomegranates, other; strawberries; raspberries, blackberries, mulberries, loganberries, black, white or red currants and gooseberries and other; cherries and other; apricots; prunes; apples; cherries; pine nut; peaches; plums; lichis; raisins and other; mixtures of nuts or dried fruits of this chapter; peel of citrus fruit or melons (including watermelons) fresh, frozen, dried or provisionally preserved in brine, in sulphur water or in other preservative solutions; chewing gum, whether or not sugar-coated; white chocolate and other; cocoa powder, containing added sugar or other sweetening matter; chocolate preparation and other, filled, not filled; malt extract; preparations other than in retail packing, not containing cocoa and other containing eggs; macaroni raw; vermicelli and other; stuffed pasta, whether or not cooked or otherwise prepared; other pasta; couscous; corn flakes and other; prepared foods obtained from unroasted cereal flakes or from mixtures of unroasted cereal flakes and roasted cereal flakes or swelled cereals; bulgur wheat and other; crisp bread, gingerbread and the like; sweet biscuits; waffles and wafers; rusks, toasted bread and similar toasted products and other; cucumbers and gherkins; pickles and other; tomatoes, whole or in pieces; tomatoes paste and other; mushrooms of the genus agaricus and other; potatoes, other vegetables and mixtures of vegetables; homogenised vegetables; peas (pisum sativum); beans, shelled and other; asparagus; olives; sweet corn (zea mays var. saccharata); bamboo shoots and other; vegetables, fruits, nuts, fruit-peel and other parts of plants, preserved by sugar (drained, glace or crystallised); homogenised preparations; citrus fruit and other; cranberries (vaccinium macrocarpon, vaccinium oxycoccos, vaccinium vitis-idaea) and mixtures and other frozen, not frozen, of a brix value not exceeding 20 and other; tomato juice; of a brix value not exceeding 30 and other; cranberry juice and other; mixtures of juices, soya sauce; tomato ketchup and other tomato sauces; mustard flour and meal and prepared mustard and other; soups and broths and preparations; homogenised composite food preparations; ice cream and other edible ice, whether or not containing cocoa; protein hydrolysates and other; concentrates for aerated beverage in all forms; syrups and squashes; emulsifying agents for food and dairy products; preparations including tablets consisting of saccharin, lactose; sweet meats and other; mineral waters; aerated waters and other; dog or cat food, put up for retail sale; eau-de-cologne; perfumes and other; lip and eye make-up preparations; nail polish and other; face powder; talcum powder and other; face and skin creams and lotions; tonics and skin food and other; shampoos; preparations for permanent waving or straightening; hair lacquers; cream for hair; dyes for hair and other; tooth paste and other; dental floss and other; pre-shave, shaving or after-shave preparations; deodorants and antiperspirants; perfumed bath salts and other bath preparations; “Agarbatti” and other odoriferous preparations which operate by burning and other; contact lens solution and other; toilet use (including medicated products) and other; soap in other forms; organic surface-active products and preparations for washing the skin, in the form of liquid or cream and put up for retail sale, whether or not containing soap; marble, travertine and alabaster; granite and other stone; other calcareous stone; tiles, cubes and similar articles, whether or not rectangular, the largest surface area of which is capable of being enclosed in a square the side of which is less than 7cm, and other; razors; safety razor blades, including razor blade blanks in strips; ceiling, pedestal, table, exhaust, window or wall type fans and other; self contained or split type comprising of inner and outer unit whether or not imported separately; tropical mps multi system unit 5 tonnes capacity and above and other; incorporating a refrigerating unit and a valve for reversal of the cooling/ heat cycle (reversible heat pumps) and other, incorporating a refrigerating unit, not incorporating a refrigerating unit; combined refrigerator-freezers, fitted with separate external doors; compression-type and other.
Reuters adds: In its last review, the IMF had warned that the release of December´s approved $502 million tranche depended on the announcement of new measures to generate an extra Rs40 billion in revenue. “This was a deadline in a sense, and if the government didn’t do it the next tranche of the programme would at least be delayed, if not suspended,” Khurram Husain, an economic analyst and journalist, told Reuters.Husain said if the measures did not raise enough funds, the government would have to raise taxes on staples such as electricity and petrol.