The Supreme Court (SC) of Pakistan has imposed a tax of Re1 per litre on mineral water companies operating in Pakistan. This decision came about as a result of the suo-moto notice against the use of groundwater of Pakistan and will push the market to be more sensitive towards the resources of a country along with the responsibility of paying taxes on the consumption of these resources. Due to the lack of legislation on the matter, the funds collected from this taxation will be transferred to the dam fund, as per the order of the apex court

However, the federal government must look at the ad-hoc nature of this arrangement and look to come up with a more permanent solution to it. Under a democracy only the legislature is allowed to levy taxes or amend the nation’s budget, and we have seen taxes imposed by other authorities come under question before – in fact the SC berated phone companies for excessive and ad-hoc taxation itself not too long ago. In order to avoid any legal difficulties in the future, through challenges to the order, the Parliament must make this order permanent by legislation.

There is little argument that this was a necessary move from the apex court, especially given the severity of the water crisis in Pakistan. These companies have been functional in the country for a long time without taxation and their working needs to be regulated.

The SC has demanded a thorough study on the matter. For this purpose, a special committee has been formed. Headed by Prof Dr Mohammad Ahsan Siddiqui and comprising representatives of the provincial chief secretaries, director generals of the federal and provincial environmental protection agencies (EPAs) and others, to devise a mechanism for calculation, collection, and monitoring of the recovery of water charges from all major industries consuming surface or groundwater. This move will help understand how the existing set up can be improved.

Along with this, the committee has been advised to start implementing the water tariff on these industries and a metering mechanism will installed. As part of their corporate social responsibility, these companies have been advised to launch billion tree programs. With a milestone like this, the SC has pushed the pace for the development of this sector along with giving the federal and provincial governments the direction to work upon. It is imperative to legislate on these developments and steer the legal framework of the country in the next phase.