Miftah Ismail in Islamabad in a file photo. Image Credit: REUTERS

Islamabad: Pakistan on Thursday announced the lifting of ban on import of non-essential and luxury goods as demanded by the International Monetary Fund (IMF), but such items, a top official said, will be heavily taxed.

Pakistan banned the import of all non-essential luxury goods in May to avert a balance of payments crisis and stabilise the economy.

“It is the requirement of international community that there should be no ban, so we are lifting ban on all products. But simultaneously the duties I am going to impose would not let these commodities to enter Pakistan as finished goods,” Federal Minister for Finance and Revenue Miftah Ismail said.

Addressing a press conference, the minister said Regulatory Duties (RDs) would be enhanced three times or to the maximum possible level and could go even upto 400 to 600 per cent or more. He said the prime minister was not in favour of luxury products’ imports, knowing his responsibility to provide essential and basic commodities to the people of the country. However, he said ban was lifted to comply with the IMF, international agreements and World Trade Organisation (WTO).

“Duties will be imposed on import of luxury goods. But if people still want to import they are free to do so,” he added.

He said that Pakistan has not enough dollars to spend on import of luxury items, adding that the existing resources would be utilised to provide people of the country with flour, wheat, cotton, edible oil instead of I-phones or luxury vehicle.

The minister said Pakistan and the IMF board were scheduled to meet on August 29 as the country had already fulfilled all conditions demanded by the fund.

More taxes on tobacco and cigarettes

He said the $4 billion funding for improving the country’s exchange reserves had been arranged with the help of friendly countries including Saudi Arabia, United Arab Emirates and Qatar, whereas China had agreed to reroll $2 billion loans, while Saudi Arabia also agreed to reroll its funds. So the funding requirement had been met, he added.

The minister said that electricity tariff condition had also been met, hence there would be no non-funding subsidies.Likewise, the minister said that government was expecting Rs42 billion from retail taxes. However, after the reversal of the decision, the government revised the target to Rs27 billion and the gap of Rs15 billion would be bridged by imposing more taxes on tobacco and cigarettes.

He said Rs36 billion would be collected from Tobacco and cigarettes by imposing taxes. The tax on tier-2 cigarettes would be increased from Rs1,850 to Rs 2,050 per 1,000 cigarettes and tier-1 form Rs5,900 to Rs6,500 per 1,000 cigarettes.

In addition to this the green leaf Cess has been increased from Rs10 per kg to Rs380.

The minister was of the view that the country’ economy improving as Bloomberg in its report had termed Pakistani Rupee as the best performing currency in the world during August whereas the Pakistan Stock Exchange also remained best performing stock market in the world.

The minister said that the government was adopting self-reliance policy to remain within its resources and curtail fiscal deficit and bring imports of the country to the level of exports plus remittance to check current account deficit.