The top 10 items which contribute most of import taxes in Pakistan – eight of them related to energy and edible oil – contributed one-third of import taxes, or Rs409 billion, in the first five months of current fiscal year, which was the key reason behind the constantly high prices of these commodities in Pakistan.
Federal Board of Revenue (FBR) data showed that the Rs409 billion revenues generated during the July-November 2021 period were 137% higher than the collection made in the same period of last fiscal year.
During the July-November period of current fiscal year, the FBR collected Rs409 billion in taxes at the import stage on petrol, natural gas, crude oil (a new tax), high-speed diesel, bituminous coal, RBD palm oil, palm olein, furnace oil, seed and cotton, according to the FBR statistics.
Major differences were the imposition of 17% sales tax on crude oil, increase in customs duty on import of petrol from 5% to 10% and changing tax rates for palm oil.
The Rs409 billion revenues were equal to 33% of the total taxes of Rs1.2 trillion collected at the import stage over the past five months. They were 17.6% of the total tax collection of Rs2.3 trillion in the July-November period of FY22.
Data compiled by the FBR relating to duties and taxes collected at the import stage highlights heavy indirect taxes that are badly hurting consumers, particularly the lower income groups. Taxes that are paid on their domestic sales are over and above the collection of Rs409 billion.
Due to the increasing share of import taxes, the share of indirect taxes in the overall tax collection has gone up to 67%, which is hurting the poor and middle income groups more than the rich class.
Only in November, imports jumped to nearly $7.9 billion – the highest figure in the history of Pakistan.
On the back of record imports, the current account deficit widened to $5.1 billion in July-October 2021, which was 122% more than the annual deficit projection given in the Annual Plan 2021-22 by the Ministry of Planning and Development.
In the July-November period, the FBR collected Rs56.5 billion in taxes on the import of petrol on account of customs duty, sales tax and other taxes. It was higher by 50% or Rs19 billion. Petrol was the third highest revenue spinner at the import stage.
Bituminous coal import was the fifth highest revenue spinner at the import stage, bringing Rs40.2 billion worth of taxes, which were higher by Rs25.2 billion or 168%.
Palm olein imports generated Rs32 billion worth of taxes in five months, up 44% or Rs10 billion. Similarly, RBD palm oil imports fetched Rs29 billion, up 101% or Rs14.6 billion.
Various cooking oil brands have increased their prices to Rs390-410 per litre, which has affected every household, as the government failed to reduce duties and taxes on cooking oil despite making promise.
Furnace oil imports gave another Rs22.4 billion in taxes in the five-month period, higher by Rs15.2 billion or 210%.
Imports of seeds generated Rs19.4 billion in taxes for the government, up almost 100%. Cotton imports fetched Rs17 billion in revenues, higher by Rs11.7 billion or 219%.
Source: Express Tribune.