Miftah announces to remove import restrictions, but with a caveat

Federal Minister for Finance and Revenue Miftah Ismail on Thursday said that the government has decided to remove the ban on imports of all products, a restriction that was imposed to control the outflow of dollars and arrest the rupee's massive decline in value. However, he added that regulatory duty would be imposed in such a fashion that these goods would not enter Pakistan as finished goods.

“As it is a requirement of the international community, we will remove ban on all imports,” said Miftah while addressing a press conference alongside coordinator to the PM on economy, Bilal Azhar Kayani, and coordinator to the PM on Commerce & Industry, Rana Ihsan Afzal, in Islamabad.

“However, the government would impose such regulatory duties (RD) that these goods will not enter Pakistan as finished goods. We will impose the maximum permissible regulatory duty.

Miftah urges focus on exports at Islamabad summit

“Regulatory duty could be in the range of 400-600% or even higher for some sectors, as the country does not have enough dollars, and the government would prioritise the purchase of wheat, edible oil, cotton over smartphones and cars,” he said.

Miftah said heavy duty and sales tax rates would be imposed on the import of CBUs (Completely Built up Units) including autos, mobile phones, and other luxury items like imported meat, shoes, purses.

“This would allow imports to be maintained. Our aim is not to allow the import of non-essential items.

“Our goal is to comply with the agreements made with the International Monetary Fund (IMF) and other international organisations, including the World Trade Organization, while keeping the import numbers in check,” he said, adding that the government maintained the ban for three months, but some items could still be found in the local market.

"This way, we will allow items to come through the green-channel, and increase our revenue as well.

"Secondly, we have complied with issues pertaining to electricity rates. We will not give any non-funded subsidies, in order to meet the primary surplus target of Rs153 billion."

No import ban on sanitary pads or diapers, clarifies Miftah Ismail

Miftah added that the government has revised its taxation target from the retail sector, taking it to Rs27 billion as compared to the previous target of Rs42 billion.

“We will introduce an ordinance, under which the fixed tax on the retail sector would be removed, but a variable tax including a 5% sales tax and 7.5% income tax would remain in place for the coming three months on all retailers,” he said, adding that this would remain for retailers consuming 0-50 units, and would increase slab-wise.

“This would be implemented from October 1,” he said.

Taxation on cigarettes & tobacco

The minister said that the government would impose taxes to the tune of Rs36 billion on tobacco and cigarettes.

“The tax of Rs1,850 collected on cigarettes would now be Rs2,050, while Rs5,900 charged on Tier-1 cigarettes would be increased to Rs6,500.

"The green leaf cess, which was previously decreased from Rs300 to Rs10 by the previous government, has been increased to Rs380."

IMF programme

Meanwhile, at the start of the press conference, the finance minister said Pakistan has met all prior actions of the IMF ahead of the Executive Board scheduled to meet on August 29.

“The IMF told us that there is a funding gap of $4 billion. It wanted us to increase our foreign exchange reserves by $6.5 billion. Fortunately, we have met the $4 billion funding thanks to three friendly countries,” he said.

"China has offered assistance, and have told us that they would re-roll the $2 billion. Similarly, Saudi Arabia has said that they would roll over upcoming loans. Pakistan's funding requirement has been met."