Govt increases GST to 18% on IMF demand.
The government increased the general sales tax (GST) rate to 18% on Tuesday, with immediate effect, in order to collect Rs115 billion out of the anticipated Rs170 billion mini-budget. After President Arif Alvi failed to publish an ordinance sent by the government, the federal cabinet moved to enforce a further condition imposed by the International Monetary Fund (IMF) for the restoration of the $6.5 billion initiative that had been halted. 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.