While the 2022-23 budget has not yet been passed by parliament, the government has slapped a ‘mini budget’, proposing additional harsh taxes and revising income tax slabs for the salaried. A 10 per cent tax has been imposed on major industries and banks. Some financial experts believe that this move will have a multiplier effect on current inflation.
Companies will transfer the impact of this super tax to end consumers who are already burdened with massive inflation and higher costs of electricity and gas. Prime Minister Shehbaz Sharif, however, says that the super tax has been levied “to alleviate poverty”.
Hussain Siddiqui
Islamabad
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Many people think that the newly introduced super tax will result in high prices. They seem to be thinking that all companies will raise the prices of their products to ensure that their after-tax profits remain at their previous levels. This is not how companies operate. Manufacturing units that generate inelastic goods can play with their prices to increase their products. Otherwise, companies will receive a major blow if they increase prices arbitrarily as this step is likely to result in low sales.
Analysts who say that this tax will discourage investment are right, but it does not mean that the government should let industrialists enjoy high profits without giving the country its due share. At present, private owners of businesses enjoy all privileges. They make high profits, withdraw good amounts of ‘drawings’ and keep getting richer. This arrangement has left the salaried and the government with no money. With the revenue collected from the proposed tax, the government will have enough resources to establish public service programmes.
Shahid Alam
Karachi