In response to the widespread protests against the high electricity bills, former finance minister Miftah Ismail that the interim government would require approval from the International Monetary Fund (IMF) before granting relief to consumers using 200 to 300 units of electricity per month.
Following a long-awaited staff-level agreement (SLA) between Pakistan and the IMF on a $3 billion “stand-by arrangement” (SBA) on June 30, the cash-strapped nation accepted the “stringent” conditions imposed by the global lender.
During an appearance media, Miftah explained that the caretaker government has the authority to decrease the tax burden on domestic consumers who utilize up to 300 units of electricity.
“The IMF will be amenable to addressing the issue of bills if the government approaches them respectfully.”
Miftah recalled, “When I served as the finance minister, Shehbaz Sharif instructed me not to raise the power tariff for those consuming up to 200 units.”
The former finance minister emphasized that he discussed the matter with the IMF, and subsequently, the international lender granted approval for his request.
He noted that the electricity prices have reached unprecedented levels in the country, and while the government can eliminate the sales tax from electricity bills, it would still need to meet the tax collection target.
“If the sales tax is removed from electricity bills, where else will it be collected?”
Avoiding imposing sales tax on property, agriculture, and the services sector would shift the burden to the poor, which is currently happening, observed the former minister.
He urged political leaders across the spectrum to formulate a strategy to collect taxes from the wealthy, stating that taxes are not solely meant for the impoverished.
“Contracts from 1994 and 2002 have expired, so new contracts should be negotiated to generate cheaper electricity,” he suggested.
The former finance minister also proposed privatizing all electricity distribution companies (discos) in the country.
Addressing another question, Miftah clarified that the inflated electricity bills were not the responsibility of the caretaker government. He asserted that consumers were paying for power theft and the increase in circular debt.
