Top 10 items – eight of them related to energy and edible oil – contributed a third of import taxes, or Rs 409 billion, in the first five months of the fiscal year in progress, which was the main reason for the consistently high prices of these commodities. In Pakistan.
Data from the Federal Board of Revenue (FBR) showed that the revenue of Rs 409 billion generated in the period July-November 2021 was 137% higher than the collection made in the same period of the previous fiscal year. . This shows the impact of rising tax rates, rising commodity prices, and increasing imports.
Prime Minister Imran Khan last Sunday kept gasoline prices unchanged at a record high of Rs146 per liter by raising the tax rate to more than Rs6 per liter.
During the July-November period of the current fiscal year, the FBR collected 409 billion rupees in import-stage taxes on gasoline, natural gas, crude oil (a new tax), High-speed diesel, bituminous coal, RBD palm oil, palm olein, fuel oil, seeds and cotton, according to RBD statistics.
The main differences were the imposition of a 17% sales tax on crude oil, the increase in tariffs on the importation of gasoline from 5% to 10% and the change in tax rates from Palm oil.
The revenue of Rs 409 billion was equivalent to 33% of the total taxes of Rs 1,550 billion collected at the import stage over the past five months. They accounted for 17.6% of the total tax collection of 2.3 trillion rupees during the July-November period of fiscal year 22.
Data compiled by the FBR on duties and taxes collected at the import stage highlight heavy indirect taxes that severely penalize consumers, especially low-income groups. The taxes that are paid on their domestic sales are in addition to the collection of 409 billion rupees.
Due to the growing share of import taxes, the share of indirect taxes in overall tax collection has increased to 67%, harming the poor and middle income groups more than the rich class.
Pakistani imports are also set to increase significantly due to various factors such as expansion of economic activities and high food imports due to a decline in their domestic production.
The central bank had forecast $ 61 billion in imports for the current fiscal year, but the Commerce Department estimated a record $ 72 billion in imports, which now appears to be a lower figure.
It was not until November that imports jumped to nearly $ 7.9 billion – the highest figure in Pakistan’s history.
Against the background of record imports, the current account deficit widened to reach $ 5.1 billion in July-October 2021, i.e. 122% more than the annual deficit projection given in the 2021-22 annual plan of the Ministry of Planning and Development. It also reflects badly on the government, which cannot make realistic macroeconomic estimates.
The import of liquefied natural gas (LNG) was the main source of income at the import stage.
The FBR collected 79 billion rupees in taxes on gas imports, an increase of 176% or 50.3 billion rupees compared to the same period last year. The value of LNG / gas imports more than doubled to Rs 322 billion.
Imports of crude oil reached over 71.5 billion rupees in taxes at the import stage, up 588% or nearly 61 billion rupees after the government slapped 17% GST on imports of crude oil in the budget.
During the July-November period, the FBR collected Rs 56.5 billion in gasoline import taxes for customs duties, sales tax and other taxes. It was higher by 50% or Rs19 billion. Gasoline was the third highest source of income at the import stage.
The collection of Rs 42 billion in taxes on the import of high-speed diesel was the fourth largest source of revenue at the import stage, which was 93% or Rs 20 billion higher.
These figures suggest that import taxes were one of the main reasons for the historically high prices of petroleum products in Pakistan. The depreciation of the rupee against the US dollar was fueling the fire.
Higher diesel prices were also causing inflation due to rising transportation tariffs and soaring agricultural production costs in areas where canal water was not available.
Inflation for the transportation group rose more than 24% in November compared to the same period last year.
Importing bituminous coal was the fifth highest source of income at the import stage, bringing in 40.2 billion rupees in taxes, which were 25.2 billion rupees or 168% higher.
Imports of palm olein generated Rs 32 billion in taxes in five months, up 44% or Rs 10 billion. Likewise, imports of RBD palm oil reached 29 billion rupees, up 101% or 14.6 billion rupees.
Various brands of cooking oil have raised their prices to Rs 390-410 per liter, which has hit every household as the government has failed to reduce duties and taxes on cooking oil despite promises .
Imports of heating oil gave an additional 22.4 billion rupees in taxes over the five-month period, an increase of 15.2 billion rupees or 210%.
Seed imports generated Rs 19.4 billion in taxes for the government, up almost 100%. Cotton imports brought in 17 billion rupees, up 11.7 billion rupees or 219%.
Posted in The Express Tribune, December 5e, 2021.
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