August 29 is not too far when the International Monetary Fund (IMF) meets to release a bailout package for Pakistan, but before that, the government had to undergo a sea of tax-related changes to meet the tough terms of the fund, and the latest among them is the withdrawal of the budgetary fixed tax scheme for traders besides increasing tax rates to collect additional Rs18 billion from the tobacco industry. The latest taxation system meets the lateral demand of the IMF. Practically, the finance bill for the fiscal year 2022-2023, passed in June last, has partially, if not entirely, been changed. The media and traders have called the Tax Laws (second amendment), Ordinance 2022, issued on Monday, a mini-budget under which the government also withdrew a fixed tax collection plan for retailers on power bills. The mini-budget facilitates retailers, but it is a set of bad news for several sectors as well as taxpayers. Retailers, which have strong political backing from the ruling Pakistan Muslim League-N, will be dealt with under the old system. That means Rs42 billion, which was to be collected through the fixed tax scheme, will be passed on to other sectors and individuals. The tier-I retailers, however, will be charged taxes through their commercial power bills. This is not the last change that the government has introduced in the finance bill as the latest ordinance allows the federal government to amend any scheme and determine its modalities, including tax rate or amount and the date when it will be implemented for retailers to collect tax on commercial connections.
True, the government has no other option but to succumb to the IMF pressure, but it is the government’s duty to improve the taxation system and take measures to remove hurdles for taxpayers. Instead of increasing the taxpayers, the government has kept on burdening the already taxed people with more and more taxes. The latest ordinance is just another addition to the course. The ordinance only rationalizes advance tax rates on passenger transport vehicles and exempts vehicles of passenger and goods transport from capital value tax, but the most neglected sector, agriculture, remains neglected. This must be corrected at the earliest.
