Finance Bill 2022: amendment to increase petroleum levy adopted

The National Assembly on Wednesday approved the amendment to Finance Bill 2022 that gives the government permission to increase petroleum levy up to Rs50 per litre.

Speaking during the National Assembly session that met to debate the amendments to Finance Bill 2022, Finance Minister Miftah Ismail clarified that the amendment gives government the right to impose at most Rs50 per litre levy.

“(However) I do not see a scenario in which the levy will go up to Rs50 anytime soon.”

He added that the government had kept the levy at zero at present.

Increasing the petroleum levy is a key requirement as Pakistan looks to resume its stalled programme with the International Monetary Fund (IMF).

Finance bill further amended

During the session, State Minister for Finance Ayesha Ghous Pasha said that nearly 80% of amendments in the finance bill were related to taxes.

She reiterated that the government aimed at taxing high income earners and relieving the rest of the public.

Meanwhile, the participants also green lighted collection of sales tax through utility bills of shopkeepers and imposition of 5% tax -on the services of IT and software consultants.

An amendment to rescind the relief provided to salaried class was also approved.

NA: Amendments to finance bill may be presented today

As per the original budget proposals, income tax was not to be imposed on individuals (where income of the individual from salary exceeds 75% of taxable income) earning between 0 and Rs600,000 a year. On the next slab (those earning between Rs600,000 and Rs1.2 million a year), a nominal amount of Rs100 would have been deducted per year.

However, under the new rates, people making Rs0.6-Rs1.2 million per year would now be liable to pay 2.5% income tax.

Furthermore, the National Assembly also approved 10% super tax on 13 high earning sectors. On Friday, Prime Minister Shehbaz Sharif announced 10% poverty alleviation tax or super tax on large industries in his "bid to relieve the general public of tax pressures".

Super tax a one-time levy, will help narrow budget deficit: Miftah Ismail

“The collection from this tax will be used to alleviate poverty in Pakistan and will be funded by the high income earners,” he said after a meeting with the government’s economic team.

The tax will be applicable on cement, steel, sugar, oil and gas, fertiliser, LNG, textile, banks, automobile, beverages, chemicals and tobacco sectors. Later, finance minister Miftah Ismail also mentioned airlines as among those included in the list, taking the total of 13 sectors.

Miftah elaborated that the indirect tax (super tax) was aimed to helping the state accumulate funds under the head of tax collection and narrow down the budget deficit. He also clarified that the charge was a one-time levy.

The National Assembly also gave a go ahead to 1-4% super tax on salaries of high income individuals which the government introduced last week.

The leadership imposed 1% tax on those earning up to Rs150 million per annum, 2% tax on those earning Rs200 million per year, 3% tax on people making over Rs250 million per year and 4% tax on individuals making over Rs300 million.

An amendment was also approved that imposed a levy of Rs100-Rs16,000 on import of mobile phones depending on its value.

The amended Finance Bill, 2022, has incorporated further new amendments late Tuesday night including a further increase in the incidence of Federal Excise Duty (FED) on cigarettes, a possible reduction in the sales tax rate from 17% to 1% on the import of pharmaceutical raw materials, tax exemption to cinemas/production houses and change in the definition of “deemed rental income” by replacing words “immovable properties” with “capital assets” and other legal and procedural changes in the Finance Bill, 2022.

The FBR has also reduced the capital value tax (CVT) on vehicles from 2% to 1% under the amended Finance Bill 2022.