Government Raises GST to 18% on IMF Demand

To raise Rs 115 billion out of the anticipated Rs 170 billion mini-budget, the government on Tuesday increased the general sales tax (GST) rate to 18% and dramatically hiked levies on cigarettes with immediate effect.

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.
But the global lender will accept only permanent tax measures, which the government will ensure by getting the nod of parliament. While exercising its administrative authority, the federal cabinet increased the GST rate by 1% to 18%.

Moreover, it also enhanced the federal excise duty (FED) rates on cigarettes to give effect to Rs 115 billion in new taxes from midnight. For the first time ever, the government made a real dent in the tobacco sector by massively increasing the taxes on cigarettes.

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