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Tuesday June 25, 2024

Proposal made to 'increase tax' on import of cellphones: sources

Coalition government is expected to lay out fiscal targets in the budget on Wednesday

By Ashraf Malkham
June 11, 2024
Apple iPhones are seen inside an Apple retail store. —Reuters
Apple iPhones are seen inside an Apple retail store. —Reuters

ISLAMABAD: In a bid to improve accomplishment of the revenue target, it has been proposed that tax on import of mobile phone should be raised in the federal budget 2024-25, scheduled to be announced tomorrow, sources told Geo News.

Sources within the Federal Board of Revenue (FBR) said: “A proposal has been made to impose Federal Excise Duty (FED) and increase Pakistan Telecommunication Authority (PTA) tax on the cellphone’s import.”

Moreover, the sources said, a surge in GST on the luxury item’s import has also been proposed. Nevertheless, its materialisation appeared to be difficult as already 25% GST was imposed on it, they added.

The coalition government is expected to lay out fiscal targets in the budget on Wednesday. The analysts believe that the government would like to present such a budget that will help strengthen Pakistan’s case for a new bailout deal with the International Monetary Fund (IMF).

Pakistan is in talks with the IMF for a loan estimated to be anything between $6 billion to $8 billion to avert a default for its economy.

Pakistan narrowly averted a default last summer thanks to a short-term IMF bailout of $3 billion over nine months.

While its fiscal and external deficits have been brought under control, it came at the expense of a sharp drop in growth and industrial activity as well as high inflation, which averaged close to 30% in the last financial year and 24.52% over the last 11 months.

The growth target for the upcoming year is expected to be higher at 3.6% compared to 2% this year and economic contraction last year.

Prime Minister Shehbaz Sharif has expressed public commitment to tough reforms since being elected in February elections, but high prices, unemployment and a lack of new job opportunities have piled political pressure on his coalition government.

According to sources, the federal government has prepared a five-year (2024-2029) plan for determining important economic goals. Macroeconomic framework has been made part of the plan. The federal government has decided to approve the five-year plan in the budget of next financial year. Under the five-year plan, important economic goals will be determined, as per the report published in this paper.

The sources told the publication that macroeconomic framework, energy, balance of payments, development budget, food and agriculture, population, poverty and governance reforms are part of the plan.