Senior officials of the Finance Ministry and the Federal Board of Revenue (FBR) on Saturday added their advice or comments to the ''mini-budget'' plan. A ''mini-budget'' will be presented through the Finance Amendment Bill 2019 in the National Assembly by the middle of this month.
Sources in the Finance Ministry said an FBR team of Members of Inland Revenue Policy, Customs and Operations met with senior officials of Finance Ministry to discuss various tax-related proposals to generate additional revenue of Rs 150 billion with the objective of narrowing the over Rs 170 billion shortfall during the first half of current fiscal year. The government, sources stated, wants to support the export sector and customs duties on raw material being used by export industries are likely to be reduced in the Finance Amendment Bill 2019.
FBR officials are expected to schedule a meeting with Finance Minister Asad Umer for final approval of taxation measures once these are finalized by the senior officials of Finance Ministry.
Finance Minister has already told economic reporters that by mid-January 2019, he will be taking the Finance Bill to Parliament that would envisage PTI administration''s economic plan. Sources said the government''s primary focus in the budget would be on high-end earners to increase revenue collection and for this purpose targeted measures would be introduced.
The FBR is examining different proposals including increase in sales tax on petroleum products, raise in excise duty on cigarettes, cement, beverages, and vehicles (1800cc and above), increase in the rate of additional customs duty - from 2 to 3 percent - on imports across the board and further increase in the rate of withholding taxes for non-filers. However, a proposal is under consideration to reduce withholding tax on banking transactions for both filers as well as non-filers.
The government may consider a fixed tax regime for commercial/retail businesses to generate additional revenue, sources said.
The government may also increase sales tax to standard 17 percent rate for 1-2 sectors where lower rates or special tax rates are applicable.
Another proposal under consideration is to increase sales tax for five zero-rated sectors.
The proposal to raise additional customs duty from 2 to 3 percent on imports may generate revenue to the tune of Rs 25-28 billion and increase in excise duty from excisable commodities may generate Rs 40-50 billion besides discouraging imports to reduce the trade deficit.
Another proposal under consideration is to increase duties and taxes on the import of petroleum products to generate additional revenue in the remaining period of fiscal year 2018-19.
Insofar as tobacco sector is concerned, the government is considering two proposals on increase in Excise Duty on cigarettes. The first proposal is to abolish third-tier (third slab of federal excise duty) on cigarettes and revert to two-tier system. The second proposal is aimed at raising excise duty on third-tier cigarettes.
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