The Pakistan Tehreek-e-Insaf (PTI) took an exception to the ‘super tax’ imposed by Prime Minister Shehbaz Sharif on large-scale industries to offset the impact of inflation on lower income classes, saying the measures would “rattle” the economy.
In a press conference in Islamabad on Friday, the PTI secretary general, Asad Umar, said the new tax would increase unemployment and result in an increase in imports, thus deepening Pakistan’s economic crisis.
"This is a huge blow to the growing industries," Umar told reporters. According to Umar, the tax was imposed on industries that had the potential to grow and generate employment as he linked the stock market crash to the announcement of the tax.
He also criticised the government for turning its back on the policy of reducing taxes on the local industry that had been in motion for the past 20 years. He said the budget announced by the PML-N was fatal to the economy.
The senior PTI leader claimed that at the time of the ouster of the PTI government, the foreign exchange reserves of Pakistan were $16 billion but now they had declined by half. He alleged that the PML-N brought the country to the brink of default.
Read IMF lacks trust as PTI govt reneged on pact: PM
The former minister also claimed that the PML-N presented the ‘real budget’ today. He added that the government made the announcement about the tax after 14 days of debate on the budget in the Senate were over. “This is a violation of the Senate's constitutional rights,” Umar said.
According to Umar, since the ‘actual’ budget was announced today, the Senate should get another 14 days to hold a debate on the issue and warned that the budget could be challenged in a court of law if the government tried to bypass the Senate.
Former energy minister Hammad Azhar said the 'super tax' would "squeeze" the economy.
Industry is already facing crippling costs due to rising prices of commodoties and energy. This super tax will be priced in their balance sheets and passed on to the customers in many cases. Means even higher prices for the public. https://t.co/4op4vlgKg1
— Hammad Azhar (@Hammad_Azhar) June 24, 2022
“Super Tax will end up further squeezing the formal sector of the economy. This means taxing the already taxed even more. The economy is nosediving and such a measure at this time will reverse the industrialisation momentum that PTI generated,” he tweeted.
“Industry is already facing crippling costs due to rising prices of commodities and energy. This 'super tax' will be priced in their balance sheets and passed on to the customers in many cases. Means even higher prices for the public,” he added.
Former finance minister Shaukat Tarin took a dig at the PML-N and its finance minister, saying the market does not trust them.
Miftah Mian,with an overseas PhD, should have enabled you to acknowledge your own approved Economic survey which documents stellar PTI performance in the last two https://t.co/uJuVUKm6n1 refuse to accept it as it exposes your https://t.co/xmC7X4duMk does not believe you.
— Shaukat Tarin (@shaukat_tarin) June 24, 2022
“Miftah Mian, with an overseas PhD, should have enabled you to acknowledge your own approved Economic survey which documents stellar PTI performance in the last two years. You refuse to accept it as it exposes your narrative. Market does not believe you,” the senator added.
'Super tax to counter inflation'
Earlier in the day, PML-N President and PM Shehbaz Sharif announced a 10 per cent tax on large-scale industries in a bid to control 'the storm of inflation.
Read more PM promises to release details of PTI-IMF deal
The prime minister stated that the revenue generated from the 'super tax' would be beneficial for “poverty alleviation” in order to support the burden of inflation on the masses.
Sectors that will be subject to the tax include steel, sugar, cement, oil, gas, fertilisers, LNG terminals, banking, textile, automobile, cigarettes, chemicals and beverages.
Shehbaz further said that cross-subsidy would be used to strengthen public services in the education and the health sector and elaborated that such policies were necessary to reduce the country’s reliance on foreign loans.
“That is what we call economic freedom; that is what we call coming out of the shackles of slavery of borrowing money,” he furthered.
The premier also announced the imposition of another tax on those citizens who earn an annual income of Rs150 million or higher.
According to the prime minister, those earning Rs150 million will have their tax rate increased by 1%. Those earning Rs200 million will have their tax rate increased by 2%. Those individuals earning more than Rs250 million will have their tax rate increased by 3% and those earning more than Rs300 million will have their tax rate increased by 4%.
While announcing the increased tax rates, PM Shehbaz stated that the “rich would have to do their part” to alleviate the burden of inflation on the poorer segments of society.
“Those who are blessed today must come forward and make Pakistan prosperous and progressive,” he added. Shehbaz further stated that the upcoming budget would be the “first in history” that aimed at lessening the burden on the poor.
PM Shehbaz criticized the rich for evading tax, stating that it was the responsibility of all bodies of the state to ensure tax collection is thorough.