Higher prices for imported food and solar panels expected in upcoming budget

Prime Minister Shehbaz Sharif has been presented with a proposal to set a tax revenue target of PKR 12,900 billion for the Federal Board of Revenue (FBR) for the upcoming fiscal year.

Sources indicate that during a briefing to the Prime Minister, the FBR recommended new taxes exceeding PKR 1,500 billion for the next financial year. Shehbaz Sharif has instructed that these proposals be finalized.

The recommendations include increasing tax duties on imported goods, removing sales tax exemptions on food items, and imposing withholding taxes or raising customs duty rates. There is also consideration of increasing the sales tax rate on imported food items and imposing sales tax on solar panels.

Despite reservations from the International Monetary Fund (IMF), there are suggestions to grant tax exemptions to certain sectors for the fiscal year 2024-25. One proposal includes tax exemptions for companies providing warehousing services for agricultural commodities. 

Additional proposals include tax incentives for establishing agricultural warehouses and the insurance sector. A ten-year tax exemption on the import of storage and warehousing equipment is suggested to ensure food security in the country. This would help preserve wheat, rice, and various other agricultural products and fruits for extended periods, allowing farmers to store their produce in these warehouses and storage centers.

Further suggestions include offering tax credits for investments in life and health insurance and micro-insurance products. Personal accident, travel insurance, and household premium payments could also be eligible for tax credits, along with life, health, and private motor insurance.

The government’s focus on these tax adjustments and exemptions reflects an effort to balance revenue generation with promoting specific sectors, particularly those crucial for the country's agricultural stability and food security.