The federal government is preparing to introduce a mini-budget aimed at raising at least Rs50 billion to support flood victims’ rehabilitation and address a widening tax shortfall.

Officials confirmed that new levies on luxury items and cigarettes are under consideration.

The proposed mini-budget seeks to impose additional taxes on luxury vehicles, cigarettes, and imported electronic goods. A levy equivalent to the regulatory duty that was reduced in June could also be reinstated on imported products.

According to Federal Board of Revenue (FBR) officials, a five per cent levy on electronic goods is under review. The price threshold for this tax has not yet been finalised.

Levies on luxury cars and cigarettes

The plan also includes a levy on luxury vehicles with engines of 1,800cc and above. However, officials noted that approval from the International Monetary Fund (IMF) would be required before such taxes can be implemented.

In addition, the government is considering imposing a Rs50 levy on each pack of cigarettes. Unlike other revenue streams, this levy will not be shared with the provinces and will go directly to the federal government.

Shortfall in tax collection

The urgency for the mini-budget comes amid a significant revenue shortfall. The FBR reported that in August, Rs901 billion was collected against a target of Rs951bn, leaving a Rs50bn gap.

From July to August, tax revenue declined by nearly Rs40bn compared to projections. The overall revenue target for FY2025 is Rs14,131bn. However, officials said floods, reduced electricity and gas consumption, and sluggish business activity have hindered collection.