ISLAMABAD: As the government explores various options to arrest the challenges at the budget deficit front, it is mulling to levy wealth tax on moveable assets and further raise customs duty on more than 5,200 tariff lines.
To rein in imports, the newly installed PTI government is contemplating to decrease the age limit of imported cars from three years to two years, reports Express Tribune.
The period for jeep imports is being considered to be decreased to three years from five years, sources in the finance ministry disclosed.
Also, the government is contemplating to raise regulatory items on over 900 items, which includes the import of mobile phones and raising federal excise duty (FED) on cigarettes is on the card, said sources.
The measure to hike additional customs duty from 2 to 3 percent would contribute to high inflation but generate Rs40 billion in additional taxes for the government.
Currently, the maximum customs duty is 20 percent and the increase will take it to 23 percent on the highest slab, which will raise sales tax collection at the import stage.
The previous PML-N government had levied 2 percent additional customs duty to raise revenue collection and the new PTI government seems will be following suit.
On Saturday, Finance Minister Asad Umar presided over a meeting to evaluate the new tax measures, however, he was unable to find any novel source of collecting additional taxes, sources in the finance ministry shared.
Since Mr Umar failed to produce an innovative solution, the meeting evaluated the possibility of further raising the tax on cigarettes and back-pedalling the tax cuts announced by the previous government for individuals.
The government will announce a mini-budget to decrease the budget deficit from a project 6.6 percent (or Rs2.3 trillion) of gross domestic product (GDP) to 5.3 percent (or Rs2 trillion).
However, there is a possibility of reining in the budget deficit further lower to the already announced target of 4.9 percent, if the government takes aggressive measures which seems unlikely.
According to sources, there was no major space to slash development expenditures that could be decreased to Rs660 billion against approved PSDP of Rs800 billion.
Moreover, sources in the finance ministry told the government was intent on increasing revenue collection by around 0.7 percent of GDP or Rs260 billion.
As per its initial projections, because of rupee depreciation against the US dollar, the revenue collection would increase by Rs110 billion or 0.4 percent of GDP.
And sources said the government required around Rs100 billion in net revenues from additional measures if it wanted to attain its collection of Rs4.435 trillion for FY19.
A recommendation was put forth to raise the Federal Board of Revenue’s (FBR) target to Rs4.55 trillion via aggressive taxation measures, said sources.