LAHORE – SRO, that was ranked the largest one in Pakistan’s history in terms of its revenue impact, caused total welfare loss of Rs80 billion to the people, revealed a fact sheet issued by the Institute for Policy Reforms.
In one stroke, government has increased proportionate tax rate on petroleum by 60%. It negates the potential benefits to the economy from falling oil prices. Government has increased GST by a far greater margin than was needed to compensate for revenue losses. High speed diesel, a product consumed mostly by low income users, sees the greatest increase in GST rate.
As per the constitution, the National Assembly approves all tax measures through the Money Bill but the major SRO does not have National Assembly’s approval. The general perception is that GST rate increase will only partially recover the estimated Rs70 billion loss in public revenue from the decline in oil prices. In reality though, the government will collect Rs36 billion more revenue than it did before prices declined.
