PM announces imposition of ‘super tax’

Prime Minister Shahbaz Sharif imposes 10 percent super tax in an attempt to save the poor and avoid further loans

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Today, Prime Minister Shahbaz Sharif, while talking to media announced to impose “super tax” of 10 percent on big traders including, textile, banking, cigarette, fertilizers, energy and terminal sector. He said, “we have imposed tax only on upper class so that we don’t need to beg for loans.”

To achieve the enhanced revenue collection target of Rs7,440 trillion for next fiscal year, current government is taking measures towards progressive taxation system. These measures are also taken in the light of International Monetary Fund’s (IMF) continued consideration of the government’s budget figures as unrealistic, requiring additional taxation measures in addition to cutting expenditures.

Read more: The misuse of taxation in Pakistan

The PM claimed, “this is the first budget in history of Pakistan which is aimed at protecting the poor from serious challenges and unusual conditions.” Also, “it is the duty of the state to collect tax and help the poor,” he said.

Moreover, he also announced the imposition of 1 percent, 2 percent and 3 percent tax on people earning 15 crore, over 2 crore and over 3 crore per annum, respectively.

Prime Minister Shahbaz Sharif’s overarching goals are to focus on direct taxation, particularly on the income of the wealthy. This includes taxing rental income more broadly and effectively. The term “luxury tax” will not be present in the budget documents, but the intent is to tax the wealthy. According to sources, the government aims to avoid taxing sectors or products that may affect poor people.

Read more: Why Pakistan needs a new tax model for economic prosperity

On the other hand, Dr. Shahbaz Gill, ex-Special Assistant to Prime Minister of Pakistan highlighted some of the possible consequences of imposing 10 percent tax on the traders including increase in unemployment, decline in growth, 10 percent further increase in prices of all commodities including fertilizers, and intensified inflation. He also said that Imran Khan caused a record high tax collection without such strict measures.

He also commented on bringing Ishaq Dar by taking Miftah Ismail out after deteriorating the economy.