ISLAMABAD: The Economic Coordination Committee (ECC) on Wednesday approved a 25% sales tax on locally produced vehicles as it also approved a more than 65% increase in gas prices, dealing a blow to consumers already struggling with inflation.
The meeting of the committee was chaired by the Federal Minister of Finance, Revenue and Economy Dr. Shamshad Akhtar.
Under the approved measures, a 25% sales tax will be levied on domestically manufactured vehicles, targeting vehicles priced at Rs 4 million or above or with engines above 1,400 cc. These decisions, aimed at boosting government revenue, deal a significant blow to consumers already struggling with inflation.
The committee also approved a more than 65 percent hike in gas prices, fulfilling another demand from the International Monetary Fund (IMF). Final approval by the federal cabinet is pending and if granted, the increase will take effect from February 1, affecting both protected and non-protected consumers.
The tax burden on people continues to increase as the hike in gas prices is likely to hit protected consumers with an increase of Rs 100 per mmbtu, while unprotected consumers face a steeper hike of Rs 300 per mmbtu. Those with substantial gas consumption will see a substantial increase of Rs 900 per mmbtu.
Moreover, the CNG sector will bear the additional burden with an approved increase of Rs 170 per mmbtu. However, there will be no changes to fixed charges for protected and unprotected customers.
The ESC has also approved the use of a uniform gas rate for all urea fertilizer companies, bringing a level playing field to the industry.
