Pakistan’s new budget has sparked controversy due to its imposition of hefty taxes on air travel, significantly inflating costs for Umrah pilgrimages, international journeys, and business trips.
Effective from July 1, the revised airfare structure has exacerbated financial burdens for Umrah pilgrims and travelers bound for Gulf countries, Europe, the USA, Canada, and Australia. The federal excise duty (FED) on economy and economy plus tickets has surged dramatically from 40% to an astonishing 150%, translating to a tax increase on economy tickets from Rs5,000 to Rs12,500 for all destinations.
The impact of these taxes extends across different ticket classes and destinations. Business, club, and first-class tickets to the USA now incur a tax hike from Rs250,000 to Rs350,000.
Similarly, travel to the Middle East and Africa faces an increase from Rs75,000 to Rs105,000, while flights to Europe and business/first-class tickets to Australia, New Zealand, Canada, Indonesia, Japan, and Korea see a rise from Rs150,000 to Rs210,000.
This new tax regime has sparked outrage within the airline industry and among travel and tour operators, who fear its adverse effects. Overseas Pakistanis, who regularly remit foreign exchange back home, have voiced concerns over the increased financial burden. Umrah pilgrims, many of whom had already made bookings, now face unexpected additional costs of Rs12,500 per ticket. There is a growing call for the government to reconsider or revoke these taxes, particularly on Umrah tickets.
Overseas workers argue that these taxes unfairly target those contributing foreign currency to Pakistan’s economy. Some travel operators estimate potential cost increases of Rs60,000-70,000 for families traveling for Umrah, pleading for relief from the government.
Experts warn that these tax hikes may discourage travel and prompt travelers to book connecting flights outside Pakistan, potentially reducing foreign exchange inflows into the country.
