Super Tax Draws Ire from Stakeholders

Former Chairman Federal Board of Revenue (FBR), Shabbar Zaidi, has said it is the first time in the history of any parliamentary system that a substantial tax (Super Tax) with retrospective effect has been levied without any paper available to Members of the National Assembly.

On the issue of Super Tax, former Chairman FBR Shabbar Zaidi tweeted, “This is the value we give to parliament & then we complain about weak democracy.”

Pakistan Business Council (PBC) has said that the “Super Tax” is regressive and will limit reinvestment of profits and reduce dividends to pensioners, widows, and small shareholders.

The tweet of PBC on Sunday said that the impact of super tax on listed companies with external shareholders – pensioners, retail investors, etc., is that for every Rs. 100 pretax profit, assuming total dividend payout, the state will now get Rs. 52 and the shareholder Rs. 48. Not a fair risk/reward ratio, it said.

PBC asked, “Can the Finance Minister ensure that all pending tax refunds and rebates are settled on July 1 to live up to the promise of his budget speech?. It would be a great start to restoring business confidence, especially for those affected by Super Tax. Let’s make a fresh start.”

“Super tax is regressive: It is retrospective; it limits reinvestment of profit; it reduces dividends to pensioners, widows & small shareholders, not all of whom are “rich”. What’s going for it are optics and expediency, the tweet added.

Finance Minister, Miftah Ismail, on Sunday, tweeted, “Everyone talks about the benefit of direct taxes and now that we have done that, and imposed a one-time Super tax from one percent to 10 percent on companies and individuals earning a minimum of 15 crores, why so much consternation? This year we will have a Tax-to-GDP ratio of 8.6 percent, one of the lowest in the world.”

 

“This year we will have a primary deficit of about Rs. 1,600 billion, after agreeing with the IMF in February that it would only be Rs. 25 billion. I have to make an adjustment of Rs. 1,750 billion in primary deficit in one year. This isn’t easy or trivial,” he added.

He tweeted, “After 4 record budget deficits under PTI, I am not going to run another ruinous deficit. This year, after 4 years of PTI, we will have the highest trade deficit. I must contain this unsustainable current account deficit. The alternative is the default. The 3 highest current account deficits (CADs) in history are 2007/08, 2017/18, and this year 2021/22. This has been a fiscally irresponsible year, and I have to contain the damage.”

“What did I do? I super-taxed the factories owned by the PM’s sons. I super-taxed my businesses. This has to be a shared sacrifice. Those of us who are rich have to come forward and pay. Most kids passing matric exams from government schools cannot even write two sentences in Urdu or calculate percentages. We are failing our children. We are not providing adequate health care to most poor citizens. Our governments have to do better in the limited resources we have. We must make the field even for the rich and poor. My job is to provide adequate resources to our governments and of course to ensure we meet our international financial commitments. And InshaAllah I will make sure of that,” the Finance Minister tweeted.

 



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