Industries to close, inflation storm ahead: PTI

ISLAMABAD: Opposition leaders and industry players Friday slammed the coalition government for imposing a 10pc super tax on 13 major large-scale industries, saying that the decision would lead to "closure of industries.”

Addressing a press conference, PTI leaders Asad Umar, Hammad Azhar, and former finance minister Shaukat Tarin said that the measure would force industries to shut down, a move which will eventually lead to a "storm of inflation".

Tarin, while taking a swipe at the coalition government, said that it talks about taking care of the poor but its actions show otherwise. In an address to the nation Friday, Prime Minister Shehbaz Sharif announced a 10pc super tax on sectors, including sugar, oil and gas, cement, steel, airlines, fertilisers, LNG terminals, textile, banking, automobile, cigarettes, beverages and chemicals.

“If they [government] do not announce elections afresh, Pakistani state will follow Sri Lanka's route,” he said, accusing the new government of lying about the economic situation.

Shedding light on the immediate reaction of the market, Tarin highlighted that the currency had once again lost its value while a bloodbath was witnessed at the Pakistan Stock Exchange (PSX). Later, the former finance minister also took to his Twitter to accuse Federal Minister of Finance and Revenue Miftah Ismail of ignoring the 'stellar' economic performance during PTI’s tenure.

"Miftah, an overseas PhD, should have enabled you to acknowledge your own approved economic survey which documents a stellar PTI performance in the last two years,” he wrote. “You refuse to accept it as it exposes your narrative. [The] market does not believe you,” he added.

Meanwhile, Asad Umar warned that the federal budget for the fiscal year 2022-23 can also be “challenged in the court” and if the Senate does not recommend changes, then this document will be illegal. Umar said: "This [super tax] is an attack on those sectors of the economy that have the potential of growth [...] that can increase production and livelihood [...] and this is the reason why the market lost 2,000 points during Shehbaz Sharif's speech.

"You can clearly figure out from this how dangerous and fatal the budget is for the economy," the former federal minister pointed out. Meanwhile, former energy minister Hammad Azhar said that the industry was already facing crippling costs due to the rising prices of commodities and energy. “This super tax will be priced in their balance sheets and passed on to the customers in many cases, [which] means even higher prices for the public,” he wrote on Twitter.

The PTI leader further noted that the super tax will end up further squeezing the formal sector of the economy. “This means taxing the already taxed even more,” he said, adding that the economy was nosediving and such a measure at this time will reverse the industrialisation momentum that PTI had generated.

Meanwhile, PTI leader Shahbaz Gill criticised the incumbent coalition government for its decision to impose a 10% super tax on industries and listed some of its consequences: rising unemployment, decline in growth, 10% further increase in prices, and an intensifying inflation storm. He said that former prime minister Imran Khan increased the record of tax collection instead of taking such "cruel measures".

“The 10% super tax on an industry already carrying a disproportionate burden when agriculture and trade contribute little and investment level is low and retrogressive. What makes it worse is that it is retrospective,” the Pakistan Business Council (PBC) said on its official Twitter handle.

It further questioned how taxing the already taxed going to encourage more to join the tax base? “How would manufacturing grow when commercial importers enjoy full and final tax on under-invoiced goods? How will we balance the current account?” the business council raised its concerns.

Alpha Beta Core CEO Khurram Schehzad highlighted that with a 10% super tax, Pakistan’s select corporate income tax with all other taxes went beyond 50%. “Corporate investor tax reached 55%; highest in the region, one of the highest in the world; probably highest in Pakistan’s history too,” he noted, questioning why not tax the untaxed than taxing the taxed always?