Amid much controversy surrounding its inflationary impact, the Finance Supplementary Bill 2021, colloquially being referred to as ‘Mini Budget’, has landed in parliament for approval, after the cabinet eventually gave its nod. Passing of this Bill is a condition requisite for release of next tranche of USD 6 billion IMF Stand-by facility, as the lender believes that many exemptions in the tax laws have been creating ‘distortions’ in the economy. The focus of the Bill is therefore withdrawal of many such exemptions, mainly in sales tax regime, with FBR projecting a revenue impact of around Rs. 360 billion for the ongoing fiscal year, though the Finance Minister is on record to have projected an impact of Rs. 02 billion only for the general masses. On the other side however, the Bill provides a much needed fiscal space to the Government by making imports more expensive and reducing the pressure on foreign exchange.
