Govt unleashes tax tsunami, Price hikes across the board from petrol to milk, including infant formula and steep new tax rates will take a sizeable bite out of household incomes due to abnormally high new tax rates.
What appears to be unparalleled in Pakistan’s history, despite heavy taxation there is still a Rs800 billion gap against the measures taken in the budget and the new Rs12.970 trillion tax target for which IMF has ordered.
Pakistan People’s Party (PPP) former finance minister Senator Saleem Mandviwalla claimed that a “tsunami of inflation” would hit the country if “The Finance (Supplementary) Bill, 2021”was passed by the National Assembly.
“Several edibles, especially imported items, are going to get costlier if the finance bill is passed. The bill proposed 17percent sales tax on a number of items including imported live animals, steak meat, fish, vegetables, high-end bakery items, branded cheese and sausages that were earlier exempted from taxes. Even though poultry and beef are among the basic food items that have been exempted from tax, they may get costlier given that the legislation will raise the sales tax on imported machines used in the poultry sector from 10percent to 17percent in addition to increasing tax on local poultry and cattle feed from 7percent to 17percent. The bill also proposed an increase in general sales tax, from 10pc to 17pc, on dairy items sold in branded packaging,” Saleem Mandviwalla expressed these views, while addressing a news conference along with Senator Palwasha Khan.
The government has also proposed to seal the shop of the traders who would not file income tax returns, including imprisonment for six months. A Rs15 per kg tax has been imposed on the supply of sugar to commercial dealers and beverage producers.
The packaged milk has been slapped with 18% GST, including infant milk. The government has not even spared the students and imposed an 18% tax on stationary and 10% on computers. The DAP fertilizer is now subject to 18% GST. The tractors are also taxed at 18%.
He said that medicines could also get expensive as the legislation proposes the withdrawal of tax exemptions worth Rs160billion on the pharmaceutical sector. He said that it would also lead to the imposition of 17pc sales tax on imported raw material for pharmaceutical active ingredients.
Computers
The PPP leader said that the bill also proposes a 5pc sales tax on imported laptops and 17pc tax on imported magazines and journals.
The massive increase in the size of the budget does not reflect the harsh economic ground realities, but the finance ministry’s hands are tied due to the IMF’s insistence on Rs9.8 trillion allocations for interest payments, whether people live or just die.
