Woes of people not over

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THE emerging stability in the exchange rate and prospects of a further cut in the prices of the petroleum products for the next fortnight are widely being hailed by masses hoping that these developments might lead to a substantial reduction in the overall prices but media reports and ground realities clearly point out that woes of the people as far as inflation is concerned are far from over.

On the day when the National Electric Power Regulatory Authority (NEPRA) allowed the K-Electric to collect nearly 25 billion rupees from power consumers, permitting the company to collect an additional Rs11.

10 per unit in their electricity bills for August and September 2022, reports suggested the Government was making preparations for a mini-budget envisaging taxes worth Rs. 40 billion to meet tax collection target and to fulfilling the preconditions set by the International Monetary Fund (IMF) for resumption of its stalled programme.

The mini budget became a necessity when, succumbing to the pressure of the trading community, the Government withdrew the fixed tax scheme to raise tax worth Rs. 40 billion through monthly electricity bills.

The scheme was justifiably aimed at bringing 300,000 out of a total of 900,000 shops in the country but businessmen resisted the plan tooth and nail and finally succeeded in their bid to avoid paying due taxes.

Now, as per reports, the Government is contemplating to impose taxes on fertilizer, sugar and textile industry to amend for the exemption given to those who are minting money.

It is understood that these sectors would not absorb the taxes but pass on the burden to the end consumer.

Taxing fertilizer would not be a prudent approach when the country needs to support the agriculture sector as per declared policy of the Government to promote food security.

Similarly, the present Government deserves credit for taking required measures including a ban on export to stabilize prices of sugar but imposition of tax would increase its prices, which is already on the higher side.

The Government also has a plan to tax multiple sectors to raise Rs. 30 billion to help state-run Pakistan State Oil avoid bankruptcy.

We have been emphasizing in these columns that expanding the tax net and increasing tax collection was the need of the hour as the country cannot afford to compromise its political and economic sovereignty while spreading begging bowl before bilateral and multilateral donors that are attaching unilateral conditions to the financial assistance.

However, we are laying too much emphasis on indirect taxation and all attempts by all successive governments to increase tax collection ended up adding more burden on the existing tax payers.

Industrial and business sectors were the major beneficiaries of the price-hike triggered by free fall of rupee and repeated upward revision of the prices of the POL products as they increased prices of their goods and services disproportionately in the absence of an effective monitoring mechanism.

They have increased their profit margins significantly but unfortunately, are not ready to pay their due taxes.

It is understood that the present coalition government, faced with multiple challenges and difficulties, is not in a position to assert itself effectively but it has to keep problems and limitations of the people in view.

Problems of the fixed income groups have increased due to upward revision in the rates of income tax under pressure from the IMF and ever-increasing inflation.

The Government should, therefore, come out with some out-of-box solution to increase tax collection.

As for hike of Rs.11 in the tariff of K-Electric on account of fuel adjustment charges, a similar shock was received by WAPDA consumers when they got mind-boggling electricity bills for July 2022.

No doubt, fuel price adjustment varies from month to month based on the price differential of oil in the international market but instead of passing on full burden to consumers, the Government should have subsidized electricity bills as was committed by Hamza Government in Punjab but abandoned by his successor.

Again, there is understandable and justifiable criticism of the slab system and addition of more and more taxes to the electricity bills.

The Government should seriously consider introducing a universal rate for all slabs and for all consumers.

 

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