Islamabad:
The government is considering a mini-budget to raise funds for flood rehabilitation by introducing additional taxes on cars, cigarettes, electronic goods and a tax on imported items corresponding to the reduction in regulatory tasks carried out in June.
Sources said the plan is targeted at luxury articles used by wealthy individuals as well as more than 1,100 imported goods, with revenue to be collected through a federal tax.
If approved by Prime Minister Shehbaz Sharif, the mini-budget would help bridge the revenue deficit and generate funds for flood rehabilitation, although most relief and rescue work are currently being performed by the provinces.
Government sources told The Express Pakinomist that Finance Minister Muhammad Aurangzeb was chairman of a meeting on Tuesday to consider proposals that the government had to introduce through a flood tax bill.
The quantity of the extra revenue through the mini budget, the rates and the exact goods that will be affected will remain indecisive, the sources say. According to some sources, the plan is to raise at least RS50 billion through the mini-budget, but the final amount could be higher.
The development came on the heels of RS40 billion. This will undermine some of the International Monetary Fund (IMF) -related fiscal goals.
The spokesmen of the Ministry of Finance and the Federal Board of Revenue (FBR) did not respond to requests for comments about the government’s plans to impose flooding tax.
The sources said the government was considering a 5% tax on electronic goods in addition to a particular price limit. The threshold is currently ending, a source said. Likewise, there is also a recommendation to impose the RS50 tax on each pack of cigarettes, regardless of the brand and the price, the sources said.
The cigarettes are consumed by both rich and poor, and any such charge cannot dampen the government’s possible narrative of raising money from the rich to spend on the flooded population.
Unlike in the case of tax shared with the provinces, a tax is federal income and it does not become part of the FBR collection. But the FBR’s income deficit will be compensated due to the increase in non-tax revenue, such as flooding tax.
During Tuesday’s meeting, the question of the constitutionalness of the federal tax on certain goods was also discussed in the long run, the sources say.
The FBR has struggled to meet its goals despite large -scale 9% production in July compared to a year ago, according to the Pakistan Bureau of Statistics (PBS).
There has also been criticism of the government for its inability to rationalize expenses and its tendency to impose more taxes on. The IMF has also recently questioned a new proposal to introduce a new municipal tax to build RS213 billion worth Jinnah Medical Complex in Islamabad.
The sources said there was another proposal that was considered to impose a tax on the cars on the cars beyond a particular engine capacity. The government can hit 1,800cc and over motor capacity cars. The cars are already taxed strongly and the government gets 30% at 61% of the total price in taxes.
Ali Asghar Jamali, CEO (CEO) of Indus Motors, said last month that the prices of vehicles were high due to government taxes ranging from 30% to 61% of the vehicle’s total price. Jamali said the tax component in the event of a small car is 30%, including RS32,935 of the recently introduced tax on internal combustion engines.
In the budget, the government had reduced the regulatory tasks of approx. 1,150 goods as part of the IMF-controlled trade liberalization plan. Now the Ministry of Finance was considering a tax on these goods similar to the reduced rates.
According to the IMF agreement, the government cannot reverse the trade liberalization and it may have difficulty selling the proposal to the IMF during the upcoming review interviews. So far, there has been no real assessment of the damage caused by the floods and the government appealed on Tuesday to avoid speculation.
A meeting was held in the Prime Minister’s Committee on Flood Injury in Islamabad under the Presidency of Federal Minister for Planning Ahsan Iqbal. The meeting reviewed the damage assessment of the floods 2025 in detail, according to a press release.
During the meeting, the provincial governments agreed that a final assessment of flood damage would only be possible when the water was withdrawn, it added.
Iqbal said the injury assessment would be prepared in coordination with the provincial governments. He also said that a preliminary assessment of flood damage would be completed within 10 days.
Iqbal called on the media to refrain from speculation about flood damage, adding that accurate and transparent data would soon be made available. He said rehabilitation work is underway in the flooded affected areas, while federal and provincial institutions jointly carry out relief operations.
The Minister said a comprehensive assessment after the disaster needs compensation and claims would be carried out with the participation of international organizations. He assured that all relief measures in the affected areas would be based on accurate and transparent data.
