Taxzillas biggest bite yet

The Chairman Federal Board of Revenue (FBR), in a recent press conference in Islamabad, made a startling disclosure; he said the proposed Value Added Tax (VAT) would fetch an additional Rs 800 billions for the exchequer but would cause no inflation. That is slightly different from the view held by various eminent economists of the country who all agree that VAT would usher in a spike of 'super inflation. Here is a simple question to the worthy Chairman FBR; if VAT is not inflationary, as he says, who would be made to pay these additional Rs. 800 billions he is salivating from the mouth for? The VAT, quite obviously, is a tax on consumers as it would be added to the cost of almost every commodity they purchase resulting in higher prices at the product racks. The other fact about which the Chairman FBR might not be aware is that this increase would seriously jeopardize the economic health of poor and middle class consumers who would be hit more severely by it simply because of their meager, and often fixed, incomes. Their major expenditure, on food and utilities, would rise exponentially. This is not something that might bother the rich, because they can afford whatever increase there might be on these heads. But during the last two years, the continuous increments of increases in the prices of oil, electricity, sugar, wheat etc has already brought a large number of families with fixed incomes into the abject poverty bracket. The imposition of VAT would indubitably wipe out whatever is left of the white-collared middle class in this country. -AKHTAR HUSSAIN, Hyderabad, April 10.

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