THE federal cabinet has approved two major new taxes, the Reformed General Sales Tax (RGST), as well as a one-time flood tax. Both measures were announced by the Finance Minister at a press conference after the cabinet meeting, in which he said that both taxes would take effect from January 1, less than two months away. Both measures are extremely shortsighted, and both, especially the GST revision, have been undertaken at the behest of the IMF. One of the purposes of the GST revision, to broaden the tax base, cannot be achieved with the current taxation machinery, which is thoroughly corrupt, and will administer the revised GST in the same corrupt way. While the flood tax is supposed to be a one-time levy, the GST revision is to be as permanent as the original tax. While the GST lacks many of the characteristics of a genuine sales tax, the ending of its exemptions is not one of them. The GST revision has raised much controversy, and the income tax surcharge that is being levied under the guise of a flood tax is expected to raise Rs 28 billion in the six months it will be in force. It appears that this was sneaked past the cabinet along with the GST revision. That revision is expected to bring in Rs 30 billion in only six months. The extra 58 billion will not bridge the fiscal deficit, but the federal cabinet, in particular its Finance Minister, has taken no step towards any other means of bridging the deficit, which is the reduction of expenditure. Since that would mean the cabinet members giving up their luxurious lifestyles, not to mention their pomp and privileges, it is unlikely that this will come up for consideration. Another means of bridging the deficit, by taxing agricultural incomes, is being left to go by default, because bringing agricultural incomes in the tax net would affect not just many parliamentarians, but also members of the cabinet. Instead, the man in the street is being made to suffer, not just directly through taxation, but through the inflation that the new taxes will cause. The GST revision leaves all its inflationary features intact, and the price hike that will take place because of it would be disastrous, but when it is combined with the effects of the flood, and of the flood tax, it will be simply catastrophic. The inflationary effects of the GST reform have been pointed out often enough, but the flood tax, which will be a pass-through item for the companies which pay it, will have an inflationary impact all of its own. Instead of approving such inflationary measures, the cabinet should have considered how it was going to stimulate the economy, for the creation of jobs would do much more to relieve flood victims than any flood tax, and considered measures which would take the direction of the economy away from the IMF, and place them back in domestic hands.