ISLAMABAD: The government raised the general sales tax (GST) rate to 18% on Tuesday and sharply increased cigarette taxes with immediate effect in order to raise Rs115 billion out of the anticipated Rs170 billion mini-budget.
After President Arif Alvi declined to sign an ordinance that the government had sent, the federal cabinet took the initiative to carry out a further requirement established by the International Monetary Fund (IMF) for the resumption of the $6.5 billion programme that had fallen apart.
However, the global lender will only approve measures that are permanent in nature, which the government will ensure by obtaining parliamentary approval.
According to Finance Minister Ishaq Dar, after the cabinet meeting, the federal cabinet used its administrative authority to increase the GST rate by 1% to 18% and increase the federal excise duty (FED) rates on cigarettes to implement additional taxes of Rs115 billion as of midnight.
For the first time ever, the government significantly raised cigarette taxes, which had a significant negative impact on the tobacco industry.
