In a last minute bid to win approval from the International Monetary Fund (IMF), the government has agreed in principle to remove the sales tax discount on sugar, effectively doubling it to 17 per cent.
In a related development, the government is also expected to make a decision on withdrawing subsidies on power as well as take other revenue enhancing measures in line with the IMF’s recommendations. Both moves are likely to be highly unpopular politically.
The head of the Federal Board of Revenue, Salman Siddiqui, said that the FBR would propose the adoption of the policy at the next meeting of the economic coordination committee (ECC) of the cabinet.
He added that, given that the exemption was a statutory regulatory order, the move would not require legislative approval, thus bypassing the need for the government to win support from its coalition allies.
Published in The Express Tribune, March 10th, 2011.
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