LAHORE: The Friends of Economic & Business Reforms (FEBR) rejected the government’s plan of imposing additional taxes of billions of rupees in the upcoming federal budget 2021-22, besides ending duties and tax exemption, leading to a new wave of inflation in the country.
The FEBR President Kashif Anwar said that the new taxation measures include increasing income tax burden of the salaried and business individuals and the corporate sector, as the government will also withdraw about Rs360 billion worth of sales tax exemptions from next year while the sales tax is already high.
He resented that the frequent increase in electricity tariff and petroleum products’ prices along with burden of new taxes on the behest of the International Monetary Fund is dangerous game for the economy of the country, as it would make the Pakistani products uncompetitive in the international market. Kashif Anwar said that the government continued to raise gas and power tariffs, besides lifting rates of petroleum products for the revival of the stalled IMF loan programme.
He said that during the first year of the IMF program, the government had introduced billions of rupees new taxation measures to achieve the tax target but the measures did not help the government achieve its target despite putting additional burden on trade and industry.
He said that the country’s economy is recovering from a slow pace of growth and it will be an uphill task for the FBR to chase the high target of tax collection.
It is impossible for the Pakistan’s economy to sustain the burden of additional tax burden equal to 1.5 percent of the GDP at a time when the economy just recovered from the Covid pandemic, he pointed out.
He said that the IMF has also asked the government to reduce the number of income tax slabs for the business class, which will increase the tax burden of the people falling in higher income brackets, resulting into jump in cost of production and high inflation.
He said that the regular attempt of economic managers to impose new taxes and increasing oil prices along with the hike in power and gas tariffs will ultimately harm the government’s overall move of reducing the production cost for the businesses. He said that Pakistan is the most frequent customer of IMF and governments often depended on borrowing from donor agencies and accepted their stringent conditions despite the fact that these institutions are merciless money lenders which always forced Pakistan to adopt bad policies like new taxes in the budget, rupee devaluation and massive increases in the electricity and gas prices.
