Pakistan to impose flood levy on luxury goods to fund reconstruction

Pakistan’s federal government is likely to promulgate a Flood Levy Ordinance to generate additional resources for the rehabilitation of flood-affected communities and the reconstruction of damaged infrastructure across the country.

Sources told Nukta that the Ministry of Law and Justice has forwarded the draft Flood Levy Ordinance to President Asif Ali Zardari for approval. Once signed, the ordinance will come into effect immediately, empowering the government to collect a special levy on both imported and domestic luxury items.

Sources said that the proposals include a levy on high-end electronic goods priced above a certain threshold and an additional PKR 50 charge on every packet of cigarettes, regardless of brand or price.

Moreover, the government is also considering a revision of regulatory duties on dozens of imported items, including imported vehicles, aimed at generating over PKR 50 billion in additional revenue for the government’s relief fund.

Sources, however, cautioned that the proposed ordinance might face legal challenges, as funds collected through such levies cannot be transferred to provinces under the current fiscal framework.

A Commerce Ministry official, speaking on condition of anonymity, also told Nukta that the National Tariff Commission (NTC) has yet to approve the proposed revisions in regulatory duties on imported items.

According to a report issued by the Planning Commission, Pakistan’s recent monsoon floods have inflicted estimated losses of PKR 822 billion (around USD 2.9 billion). The agriculture sector sustained losses of more than PKR 430 billion, while infrastructure damage is estimated at PKR 307 billion.

Over 1,000 lives were lost, and more than 229,000 houses were either destroyed or severely damaged. In addition, 2,811 kilometres of roads and 790 bridges were affected, disrupting connectivity across several provinces.

It is pertinent to note that the International Monetary Fund (IMF), on October 15, 2025, in its World Economic Outlook (October 2025) report, estimated Pakistan’s economic growth rate at 3.6% for the current fiscal year, along with higher inflation and a widening current account deficit.