The government is planning to introduce a mini-budget later this fiscal year, with proposals already submitted to the International Monetary Fund (IMF) for approval.
According to an official document, emergency tax measures amounting to Rs130 billion have been suggested in case of a tax revenue shortfall. Among the proposed measures is a 5% increase in excise duty on sugary beverages, expected to generate Rs2.3 billion in additional monthly revenue. Additionally, a 1% advance tax on the import of machinery is projected to contribute Rs2 billion each month.
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The government is also considering imposing a 1% advance income tax on industrial raw material imports, which could bring in Rs3.5 billion per month. Moreover, a 1% tax on commercial importers and suppliers is expected to add another Rs1 billion monthly.
These proposals come in response to a Rs90 billion revenue shortfall experienced by the Federal Board of Revenue (FBR) in the first quarter of the fiscal year. The government hopes these new taxes will close the gap and prevent further financial strain.
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Due to the country’s challenging economic situation, the government had set an ambitious tax target for the current fiscal year, with new taxes worth Rs1,800 billion introduced in the federal budget. However, after falling short of this target, the groundwork for a mini-budget is now underway.
A mini-budget refers to new tax measures introduced after the annual federal budget, typically presented in June. In the past, mini-budgets amounted to Rs30-40 billion, but more recent ones have ranged between Rs200-300 billion. The need to raise tax revenues after missing initial targets leads to the creation of a mini-budget.
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The mini-budget requires parliamentary approval through a finance bill, which is presented to standing committees in both the National Assembly and the Senate, similar to the process for the annual budget.
Meanwhile, the IMF has laid out strict conditions tied to its $7 billion bailout package for Pakistan, outlining several actions aimed at boosting tax revenues and adjusting tariffs. The government has committed to timely increases in electricity and gas prices under the agreement and aims to set a tax target of over Rs15 trillion for the next fiscal year. This includes a 5% increase in GST on various goods and services, as well as the introduction of taxes on agricultural income, services, and property.
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All key professions, such as engineering, medicine, law, exports, construction, and development, will be subject to these tax reforms. Additionally, the IMF has called for a National Fiscal Agreement that requires both federal and provincial governments to raise tax revenues and share expenditure responsibilities. The government has promised to tax all income sources.
Tax collection is projected to reach Rs1.723 trillion this year, with estimates rising to Rs2.157 trillion for next year. The government plans to remove all tax exemptions and implement a uniform 10% tax on goods, alongside the proposed 5% increase in GST.
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