KARACHI: Government recently took measures to ban import of luxury items to curtail outflow of foreign exchange reserves of the country.

Analysts believe that given our rising Balance of Payment (BOP) concerns, measures like increased regulatory and custom duty on select imported items is likely to be increased.

Taxes on Non-Filer: Government could also consider to increase taxation on non-filers to increase documentation in the economy. To recall, PML-N government had introduced increased taxation in 2014 on non-filers to promote documentation. We expect government may consider increased tax rates on non-filers.

Rising burden of Pension Expense: Rising pension expense is becoming a big burden for fiscal account. In FY21, federal government pension expense stood at Rs440bn which is 0.7% of GDP and 7% of government’s total current expenditure. In 9MFY22, federal pension expense has risen by 20% to Rs395bn. In addition to this, provinces also incur huge expenses on pension expense which is on a rise. Key reform measures on rising pension expense will be key for controlling fiscal deficit going forward.

Luxury Tax: Government is contemplating possibility of imposition of luxury tax on certain high-value immovable properties and luxury vehicles in the coming budget. Tax on rental income and increase in DC rates of properties is also under consideration. These new taxation measures will assist government to achieve FY23 tax revenue target of Rs7.25trn.

Withdrawal of CNIC condition of unregistered buyers: Miftah Ismail has agreed, in principle, to introduce a fixed tax scheme for small traders and resolve all taxation-related issues of business and trade including the condition of providing Computerized National Identity Card (CNIC) numbers of the unregistered buyers.

FBR is already charging an additional 3% sales tax for unregistered buyer.

Relief Package against petroleum consumption: Prime Minister Shahbaz Sharif, recently announced relief package of Rs28bn per month for the poor segment of the society to cushion against rising fuel prices. It is also expected that government may set aside some amount for FY23 budget against this relief package.

It is also anticipated that allocations under Benazir Income Support Program (BISP) is increased owing to soaring fuel & food inflation and expected measures that is going to hit the poor segment of the society. To recall, Rs260bn was set aside for BISP and Ehsaas Program for FY22 budget.