Pakistan to increase tax rates on international air tickets

Tariq Butt, Correspondent 

Economy and economy-plus international air tickets will considerably rise from July 1 with the imposition of heavy additional excise duty as per the federal budget passed by the National Assembly (NA) of Pakistan.

Officials said that for people leaving for destinations in North America, Latin America, and Canada, the excise duty has been increased from Rs250,000 to Rs350,000 per business or club class ticket. That means that travellers will now have to pay a sum of Rs100,000 in tax for each business or club class ticket for flying to the US and Canada.

People travelling to the Middle East and African countries will pay a sum of Rs105,000 duty on their business or club class air tickets — an increase of Rs30,000 against the amount in the outgoing fiscal year.

Similarly, the duty on the same category of tickets for travelling to New Zealand and Australia has also been increased to Rs210,000. The same amount of tax — Rs210,000 — will be paid for flying to China, Malaysia, and Indonesia on business or club class tickets.

The budget has slapped taxes on every imaginable source of income, asset and consumable goods to force people cough up additional Rs1.7 trillion in taxes to finance a 30% bloated federal budget.

Out of the Rs1.7 trillion additional revenue measures, about Rs200 billion new taxes were introduced-the first mini-budget just before the start of the fiscal year 2024-25.

Despite making the lives of common citizens difficult through a new wave of taxes, the government exempted the income tax on sales of properties by serving and retired bureaucrats and serving and retired military personnel.

Prime Minister Shahbaz Sharif rejected a proposal to tax the stock market transactions and instead further increased the salaried and non-salaried class taxes by a 10% surcharge. Instead of providing any relief to the salaried and the non-salaried individuals, on the advice of the government, the National Assembly increased the effective income tax rate of a salaried person to 39%, for association of persons to 44% and for the non-salaried individuals to 50%.

Just before the approval of the budget, the government took new measures making it difficult not only to live in the country but also made it expensive to leave the country by increasing taxes on travel.

The government imposed a 10% surcharge on the income tax of an annual income of Rs10 million. This would effectively increase the income tax rate for the salaried person to 39% and 50% for the non-salaried individuals.

The Association of Persons will be charged 40% income tax and after adding the impact of a bizarre surcharge, these firms will pay 44% income tax. The government made a 100% increase in the federal excise duty (FED) rate for cement to Rs4 per kg, which will alone yield Rs80 billion in the next fiscal year. This will increase per bag cement price by at least Rs100.