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Pakistan govt plans new taxes to restrict imports

ISLAMABAD – The government is planning to introduce new taxes to restrict non-essential imports to bring down the import bill.

Sources in the Ministry of Finance said the need for new taxation has been felt to lowdown imports forthwith as the issue was not adequately addressed in budget for fiscal year 2008-09.

The country’s foreign exchange reserves, which have depleted to about $10 billion from $16 billion in the last few months, have forced the higher authorities to limit the consumption of non-essential imported items.

The IMF and the World Bank, sources said, did not count $3 billion of the banks as part of the $10 billion reserves and said that actually the government has less than $7 billion, which were not sufficient even for two months of imports.

“Therefore, if we want to continue our imports after two months, we will have to cut our huge import bill,“ said an official of the Ministry of Finance.

He said new trade policy was a “misnomer” as it did not keep the import target and as such it should be renamed as export policy only. Unofficially, he said, $37 billion import target was kept which was not at all sustainable and that it will have to be drastically revised downward by cutting non-essential imports.

Sources said that during Daily Monitoring Committee meeting it was agreed on Friday that oil and food consumption in Pakistan have grown unproportionately threatening the collapse of the current budget. The committee would meet trice a week to deal with two major issues - rising prices and the import of oil and food items. All the secretaries of the ministries have been directed to bring with them in the next meeting two proposals to deal with these two issues. They were also expected to offer their recommendation whether to lower the oil prices following their continued reduction in the international market.

The Economic Advisory Committee has been empowered to propose new measures to deal with important economic issues and its recommendations would be accepted by the Economic Coordination Committee(ECC) of the Cabinet.