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The Super tax fiscal policy was announced by Prime Minister Main Shehbaz Sherif on Friday 24th June, which since has provoked nationwide debate on whether this policy will prove effective or will propel the country to a full-scale economic crisis?
The super tax is one time 10% extra tax levied on already existing tax. The government states its objectives as to solve the economic crisis by raising 400 billion PKR, in addition, to satisfying one of the conditions of The International Monetary Fund IMF. The coalition government further explains the tax will only be imposed on 13 large-scale industries such as sugar, cement, steel, oil and gas, fertilizers, textile industry, automobile, banking industries, LNG terminals, and cigarettes.
Furthermore, The Prime Minister explains that individuals with a net worth of more than 150 million PKR will also be subjected to a 1% tax which will increase as their net worth increases. The prime minister states this is a,
“tough decision made to save the economy”,Mian Shehbaz Sharif
and “it is the time for the rich to pay for the poor”.Mian Shehbaz Sharif
Though the public is divided on whether this “poverty alleviation tax” will be beneficial to the economy or is it just another scheme of the “imported government” to make money for themselves. As PTI Secretary General Asad Umar on Friday exuviated that
“it will rattle the economy”.
Affect Of The Super Tax On The Industries
According to the economist, the government’s Super Tax can further burden the large-scale industries, which are already bearing the electricity crisis, and the exorbitant prices of petrol and diesel, which have been raised thrice this month already. The tax upon tax can largely affect their manufacturing production, and as some of the 13 industries contribute to the major exports of our country, for example, textile, it can cause a decrease in the country’s exports, further widening the trade deficit.
There also lies the disadvantage of the tax is passed onto the customers, which are already enduring the burden of inflation. It can cause “hyperinflation”, resulting in poverty and unemployment. There will be minimized external and internal investment in the industries as the tax will reduce the investible income of the investors.
The public is furious over the government, blaming them for surging the already existing economic instability and inflation.
On the other hand, some people tend to see it in a positive light, exclaiming that it is an efficacious step to extract the money from the feudal Elites who restrain more revenue than they should. The tax collection will increase, thus improving the Pakistani economic condition.
The government’s decision to impose the Super tax has sent out a wave of distress and debate around the country. This is going to be a major challenge for the coalition government to prove themselves worthy in front of the nation and that they are here to move the country on the path of prosperity, not to cause further destruction.