The proposed mini budget will tax about 144 goods at a rate of 17 percent and could increase malnutrition and stunting in the country due to an increase in the cost of goods that are critical for nourishment.
Ministry of Finance insiders said that about 144 goods that are currently either completely exempt from General Sales Tax (GST) or are being taxed at 5 percent to 12 percent rates will now be taxed at 17 percent.
The actual revenue impact from slapping GST on 144 items will be far higher than the estimated Rs352 billion, as many items will be taxed for the first time and their revenue impacts were not available with the Federal Board of Revenue (FBR). Another roughly Rs7 billion will be collected by increasing the income tax rate on mobile phone calls from 10 percent to 15 percent.
They said that the zero-rating available on imports and supplies of goods and raw materials for the preparation of milk for infants will be withdrawn and be taxed at 17 percent to raise Rs9 billion annually. Similarly, preparations suitable for infants put up for sale that are currently exempted will be taxed at 17 percent to raise another over Rs6 billion annual revenue. The net revenue from taxing infant milk is estimated at more than Rs15 billion.
The supplies to duty-free shops will be taxed at 17 percent and since they will be taxed for the first time there are no revenue estimates from the measure. The GST rate on cars above 850cc will go up to 17 percent, tax on import of electric vehicles in CBU conditions will increase from 5 percent to 17 percent, business-to-business transactions will go up from 16.9 percent to 17 percent.
Many medicines might go beyond reach of the poor as the government has proposed to slap 17 percent GST on raw materials for pharmaceutical products to generate Rs45 billion revenues – the highest from any head. This includes Rs30 billion at the import stage and Rs15 billion at the local stage. But the FBR says that raw material will be zero-rated and the board will give refunds.
The premixes of growth stunting will be taxed at 17 percent, which is contrary to PM Imran’s vision to end stunting.
Bread prepared in bakeries, restaurants, food chains and shops will be taxed at a 17 percent rate for nearly Rs5 billion annual revenue, while the bread prepared in tandoors (naan, chapatti and sheermal) shall remain exempt. Foodstuff served in messes will be taxed at a 17 percent rate as well.
Tax on prepared foodstuff and sweetmeats supplied by restaurants, bakeries, caterers, and sweetmeat shops will increase from 7.5 percent to 17 percent, making hoteling expensive.
The imported edible vegetable will be taxed for Rs7 billion revenues. Red chilies not sold in retail packaging will also be taxed. Cereals and products of the milling industry will be taxed for Rs5 billion revenues and local supply of rice, wheat and meslin flour will remain exempt.
The matchboxes will also be taxed at 17 percent, whey, excluding that sold in retail packing under a brand name, and sausages and similar products of poultry meat or meat offal, excluding sold in retail packing under a brand name or trademark, are also on the list to tax at 17 percent.
The tax rate on flavoured milk sold in retail packing under a brand name will be increased from 10 percent to 17 percent for over Rs1 billion revenue. The rate on yogurt sold in retail packing under a brand name will go up from 10 percent to 17 percent, the rates on cheese, butter, cream, desi ghee, whey, milk and cream sold in retail packing under a brand name will also increase from 10 percent to 17 percent.
Machinery and equipment related to dairy products will now be taxed at 17 percent as against the existing 5 percent rate. Mobile phones will also be taxed at a standard 17 percent rate.
Supplies made from retail outlets as are integrated with the Board’s computerized system that are currently taxed at 10 percent will now be taxed at 16 percent. Frozen prepared or preserved sausages tax rate will go up from 8 percent to 17 percent,
Seeds, fruits and spores of a kind used for sowing are proposed to be taxed for Rs4 billion annual revenue. The 17 percent GST on Cinchona bark will get a minimum of Rs4 billion revenue every year. The import of sugarcane will also attract a 17 percent tax.
The import of newsprint, newspapers, journals, periodicals, books but excluding directories will be taxed at 17 percent for Rs1.5 billion annual revenue but their local supply of newspapers will remain exempt. Promotional and advertising material will be taxed at 17 percent.
Goods imported by or donated to federal and provincial hospitals will be taxed at 17 percent. Similarly, goods supplied to hospitals run by the federal or provincial governments will be taxed for Rs1.5 billion annual revenue.
Goods imported by various agencies of the United Nations, diplomats, diplomatic missions will also be taxed at the rate of 17 percent. The annual revenue potential at the current import volume is Rs300 million. Goods received as gift or donation from a foreign government or organisation will be taxed at 17 percent.
Import of all goods received, in the event of a natural disaster will also be subject to tax. Articles imported through the post as unsolicited gifts will be subject to 17 percent tax.
Contraceptives and accessories will be taxed for Rs200million in revenue. Sewing machines will be taxed at 17 percent rate.
The import of live animals and live poultry will be taxed at 17 percent for Rs700 million revenue but its local supply will remain exempt. The meat of bovine animals, sheep and goat to be taxed but their local supply will remain exempt. The import of fish and crustaceans, excluding live fish to be taxed but local supply will remain exempt.
Eggs, including those for hatching to be taxed for Rs2 billion in revenue but local supply will remain exempt. Import of live plants to be taxed and local supply will remain exempt.
Uncooked poultry meat is on the list to be taxed for a minimum of Rs2 billion in revenue. The cottonseed is proposed to be taxed at 17 percent GST for Rs3 billion annual revenue. The iodized salt will be taxed for Rs300 million annual revenue.
The rate on ingredients of poultry feed, cattle feed, except soya bean meal will go up from 10 percent to 17 percent. Taxes on tillage and seed bed preparation equipment, seeding and planting, irrigation, drainage and agrochemical preparation, harvesting, threshing and storage equipment and post-harvest handling equipment will go up from 5 percent to 17 percent.
The GST on the machinery of the poultry sector will go up from 7 percent to 17 percent, multimedia projects from 10 percent to 17 percent, lithium-ion battery will increase from 12 percent to 17 percent.
The GST on silver and gold will increase from 1 percent to 17 percent and articles of jewelry to 17 percent.
Goods imported temporarily, including passenger service items, provision and stores of Pakistani airlines, items with dedicated use of renewable sources of energy like solar and wind, high-efficiency irrigation equipment are also on the list of items to be taxed.
Green house farming equipment will be taxed for Rs5.5 billion in revenue. Fans for dairy farms for Rs500 million, fish feed, bovine semen, preparations for making animal feed will be taxed for Rs4 billion. The micro feeder equipment, plant and machinery imported by greenfield industries will be subject to new taxation.
Sprinkler, drip and spray pumps equipment is proposed to be taxed, raw cotton, single cylinder agriculture diesel engines will be taxed.
Sunflower and canola hybrid seeds meant for sowing will be taxed. Combined harvesters up to five years old to face 17 percent GST, oil cake and solid residue will have 17 percent tax and to generate minimum Rs5 billion revenue. The local supply of locally produced crude vegetable oil will be taxed for the sake of Rs2 billion annual revenue.
The tax rate on import of oilseeds meant for sowing will be increased from 5 percent to 17 percent,
Machinery and equipment for BMR of coal firing system, gas processing plants and oil and gas field prospecting, plant, machinery, equipment for mine construction or extraction phase, coal mining machinery, equipment imported for the Thar coalfield will attract the 17 percent GST rate. The machinery, equipment and spares for BMR or expansion projects for power generation under an agreement with the government of Pakistan will be taxed for Rs14 billion, and machinery, equipment and spares for BMR or expansion projects for power generation will also be subject to 17 percent GST for Rs42 billion revenue.
Similarly, machinery, equipment and spares for BMR or expansion projects for power generation through nuclear or renewable energy resources will be taxed for Rs6 billion. Effluent treatment plants, items for use with solar energy are being taxed for Rs12 billion revenue.
The rate of tax on import of plant and machinery having no compatible local substitutes will be increased from 10percent to 17percent to fetch Rs12 billion additional revenue.
Even import of POS machines will be taxed at 17percent, despite expanding web of integrated POS that is the single largest initiative of Finance Minister Shaukat Tarin.
Exported goods, which are subsequently imported within one year of exportation to be taxed for Rs3 billion revenue. Import of plant and machinery for the manufacturing of mobile phones by local manufacturers of mobile phones will be subject to 17percent GST.
Personal wearing apparel and bona fide baggage imported by overseas Pakistanis and tourists. The raw material and intermediary goods for in-house consumption will also be taxed.
Compost (non-commercial fertiliser) produced and supplied locally will be taxed at 17percent, and imported plant, machinery and materials by Export Processing Zone will also be taxed.
Personal computers, laptop, notebooks whether or not incorporating multimedia kit will also face new taxation.
Finance Minister Shaukat Tarin will present the mini budget in the National Assembly at 4 pm today.