The federal budget for the financial year 2024-25 is expected to include proposals to increase taxes on imported mobile phones, sources informed Geo News on Tuesday.
As the budget presentation approaches, sources within the Federal Board of Revenue (FBR) have indicated that the proposal includes increasing the Pakistan Telecommunication Authority (PTA) tax and imposing Federal Excise Duty on imported cell phones. Additionally, there is a suggestion to raise the General Sales Tax (GST) on these imports. However, implementing an additional GST may prove difficult due to the existing 25% GST.
The coalition government is set to outline its fiscal targets in the budget on Wednesday. Analysts anticipate that the government will aim to present a budget that strengthens Pakistan’s position for securing a new bailout deal with the International Monetary Fund (IMF). Pakistan is currently negotiating with the IMF for a loan estimated between $6 billion and $8 billion to prevent an economic default.
Last summer, Pakistan narrowly avoided defaulting, thanks to a short-term IMF bailout of $3 billion over nine months. While this helped control fiscal and external deficits, it also resulted in a significant decline in economic growth and industrial activity, along with high inflation, which averaged close to 30% over the last financial year and 24.52% over the past 11 months. The growth target for the upcoming year is expected to be higher at 3.6%, compared to 2% this year and economic contraction last year.
Prime Minister Shehbaz Sharif has committed to implementing difficult reforms since his election in February, but high prices, unemployment, and a lack of new job opportunities have intensified political pressure on his coalition government.
In addition to the immediate budget plans, the federal government has prepared a comprehensive five-year plan (2024-2029) to establish critical economic goals. This plan includes macroeconomic frameworks, energy policies, balance of payments strategies, development budgets, food and agriculture initiatives, population control measures, poverty alleviation programs, and governance reforms. The government intends to approve this five-year plan in the budget for the next financial year.
