Pakistan to impose flood tax on imports and incomes

The Pakistani government has decided in principle to impose a 2 percent flood tax on all imports and a 5-10 percent flood surcharge on all incomes for undertaking reconstruction and rehabilitation projects after the country was hit by worst-ever floods, officials said Wednesday.

A government official said these two measures were expected to generate up to 150 billion rupees (1.76 billion U.S. dollars), 50 billion rupees from flood tax on imports and 100 billion from flood surcharge on incomes, including salaries and profits, not only for individuals but also for associations of persons, companies, businesses and traders.

The official said the proposed taxes would be imposed initially for the current year, but could be considered for continuation into the next financial year (2011-12).

Official sources said that the two additional taxation measures were currently being discussed with the International Monetary Fund (IMF) and after fine-tuning they would be submitted before the federal cabinet for approval at a meeting in mid September.

"The additional taxes will be within the ambit of the IMF program under which various major adjustments would be made in the macroeconomic indicators approved by the parliament as part of the federal budget and committed to with the international lending agencies," said sources.

The government was also considering taking all political parties in parliament into confidence over the budgetary adjustments so that they enjoyed wide ownership and may have to seek the parliament's nod, informed sources said.

Floodwaters that have devastated parts of Pakistan for five weeks have headed to the Arabian Sea, leaving 1,707 people killed, 2,631 injured and over 15 million affected, according to an official report released on Wednesday.

Source: Xinhua