LAHORE: Renowned tax practitioner Ashfaq Tola has termed Finance Minister Shaukat Tarin’s claim that the mini budget would have no adverse impact on poor as ‘joke of the year’.
Responding to a query whether he agrees with the claim of the finance minister that the mini budget would not affect the common man, he restricted his response to four words: “Joke of the year!”
Dr Ikramul Haq, another leading tax expert, said the claim of the finance minister is baseless as both the rich and the poor people consume bakery items and packets of spices which have registered an increase of sales tax in the mini budget. Also, he said, the sales tax exemption has either been withdrawn or its rate has been increased that would trigger production cost of manufactured goods, which would again be utilized by the common man.
Regarding refund of 17 percent general sales tax on the material for medicines, he said the history of refunds payment is very shaky and the manufacturers prefer to fleece consumers by adding to the price. Therefore, the mini budget would also lead to increase in the cost of medicines. However, he has agreed that prices of some essential kitchen items would remain the same, as there is no sales tax on flour and rice. So far as sugar is concerned, he said, the import of sugar and pulses are concerned, they are already subject to deduction of sales tax therefore it is not part of the mini budget.
Another tax practitioner Muhammad Shahid Baig said the incidence of indirect tax is ultimately passed on to the end consumers and all the intermediaries are absolved form the liability, therefore it is incorrect to say that consumers would not be affected by enhancing indirect taxes.
A tax consultant of the Punjab government, requesting anonymity, termed it a misinformation on the part of the government machinery as any change in sales tax would directly be proportionate to the change in commodity prices. He added that the government was trying to sell reduction of rate in sales tax on medicines whereas it has triggered inflation by withdrawing exemptions on hundreds of daily use items. Also, he said, increase of withholding tax on mobile and phone users from 10 to 15 percent would also impact the common man.
According to him, the construction services and the services of property agents have been zero rated in Islamabad capital territory obviously on the pressure of builders’ mafia. He said the government would claim that it would give boost to the construction sector but as a matter of fact no impact would be passed on to the common man in the shape of low cost houses.
The Secretary general Pakistan Tax Bar Association lamented that the finance minister is neither a financial nor a tax expert and he has no idea how policies impact the common man. He added that there was no strategic vision in policy making, as tax exemption on the import of electric vehicles has been withdrawn before their imports.
Copyright Business Recorder, 2022
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