According to official sources, the coalition government is considering introducing a slew of new tax measures in the upcoming budget to raise around Rs300 billion in additional revenue in the fiscal year 2022-23 (FY23), and has tasked the Federal Board of Revenue (FBR) to finalize areas and sectors in the coming days.
As part of the deal to revive the stalled International Monetary Fund program, a proposal for a ‘luxury income tax,’ which, if approved, will be a replica of a wealth tax, taxing real estate, including big houses in posh areas, as well as bringing owners of luxury vehicles into the ambit of this tax (IMF).
Prime Minister Shehbaz Sharif’s broad directives are to focus on direct taxation, particularly on the income of the wealthy. The proposal also includes extending and taxing rental revenue more effectively. The term “luxury tax” will not appear in the budget documents, but the intent is to tax the wealthy. According to insiders, the government intends to avoid taxing sectors or items that will disproportionately affect the poor.