The Supplemental Finance Bill, 2023, has been approved by President Arif Alvi, possibly putting Pakistan closer to the IMF’s ( International Monetary Fund) staff-level agreement (SLA) to prevent default.
The permission was given in accordance with Article 75(1) of the Constitution, which mandates that the president must give his or her assent to a measure within ten days of receiving it for assent.
With certain modifications, the National Assembly recently adopted the supplementary bill, but it came at the cost of a devastating inflation bomb on the general public.
In the lower chamber of parliament, a majority of the members voted to support the budget. The President’s approval today has, in theory, made the new tax measures worth Rs. 170 billion effective.
The Federal Excise Duty on business and club class airline tickets as well as the FED on beverages and juices have both been raised as a result of the Finance (Supplementary) Act, 2023, which has been implemented throughout Pakistan. The FED has also been raised for cement as well as for sweetened and aerated beverages.
The general sales tax (GST), which was previously 17 percent, is now 18 percent, according to the Act. The Tax on luxuries is also decided to increase from 17 percent to 25 percent.
Even though the bill had not yet received the president’s approval after the National Assembly passed it on Wednesday, the majority of the taxes provisions had already been put into place.
Relevantly, the recent mini-budget exercise is anticipated to change the IMF’s minimal tolerance for Pakistani violations of its program targets.
