Daily Times

Winding up the budget debate in the National Assembly on Friday, Finance Minister Miftah Ismail said Pakistan was no longer heading towards default adding that the government will impose super tax on the rich to reduce the budget deficit in order to end reliance on the foreign assistance. “To achieve self-reliance, an additional tax of 1 percent would be imposed on individuals and entities whose annual income exceeds Rs150 million. Those with an annual income of over Rs200 million will be subject to an additional tax of 2 percent, those earning more than Rs250 million will be charged 3 percent and those having annual income of over Rs300 million will be charged 4 percent tax,” Miftah said. He however clarified that this would be one-time tax for the Fiscal Year 2022 only. Moving on to details of other taxes, he said there were around nine million retail shops in Pakistan and the government wanted to bring 2.5 to 3 million of these shops into the tax net. For this purpose, he said, a new scheme had been introduced under which the income tax and sales tax that these shops had to pay had been “fixed with their electricity bills”. He added that under this initiative, small shops would have to pay a fixed tax of Rs 3,000 monthly and big retailers Rs 10,000. “After that, they will not be questioned on anything else,” the minister added.

Moreover, he said retailers who were dealing in gold and had shops of 300 square feet or less would have to pay a fixed income and sales tax of Rs40,000. And for bigger shops, the sales tax had been reduced from 17pc to 3pc, he added. Ismail said the withholding tax on gold sold by individuals to goldsmiths had been reduced from 4pc to 1pc. He said that a similar scheme of fixed tax would be announced for realtors, builders and car dealers. “This tax is on their income and not expenses, and this is why it will not increase inflation but increase our revenue,” Ismail said. During almost all sessions of the post-budget debate, the lawmakers took the house for granted in the absence of opposition and kept lashing the previous government of PTI. Imran khan was the target of their criticism.

Miftah strongly criticized the predecessors, saying, “As soon as the coalition government came into power, various progressive budgetary measures were adopted in order to overcome the huge deficit and put the economy on the growth path. The minister said the PTI government had badly damaged the economy, adding that the Fiscal Year 2021-22 would be remembered as the worst year, as the country deviated from all its set targets, accumulating huge deficits of up to Rs5,310 billion making around 9.85 percent of GDP. Recalling the sovereignty statements of PTI leaders, Miftah remarked: “How they are talking about the sovereignty when they had taken huge debts in their tenure which led the country to near default.”

Referring to the taxes announced by Prime Minister Shehbaz Sharif earlier, Miftah further informed the House that no indirect taxes had been imposed and neither had any tax been imposed on consumption. He further claimed that his companies will also pay Rs200 million more in taxes than before. “If we are asking others to pay more taxes, we too are contributing to this cause.”

He said the government had committed to the IMF that the primary deficit of Rs1,600 billion recorded this year would not only be brought down, but also there would be a surplus of Rs153 billion. Moreover, the minister said, the government had identified 13 sectors that had earned significant profits this year.

“And we have decided that the companies that have an income of more than Rs300m will be subject to a super tax of 10pc for a year,” he announced. The minister said the companies working in cement, steel, sugar, oil and gas, fertilizer, LNG terminals, textile, banking, automobile assembling, cigarettes, beverages, chemicals and airline sectors would have to pay this tax. He added that the government had withdrawn the condition of withholding tax on companies operating in the IT sector and had sales of less than Rs80m. He added that tax on venture capital funds invested in the IT sector had also been removed. About the oil marketing companies, Miftah said these entities had to pay a minimum tax of 0.75 percent which had been reduced to 0.5 percent.