Finance minister says this one-time tax imposed to reduce budget deficit | No more subsidies, petroleum levy to go up to Rs50 | Taxable income level for salaried class announced in budget withdrawn

ISLAMABAD   -   Minister for Finance Miftah Ismail on Friday informed the National Assembly that the coa­lition government has decided to impose 10 per cent ‘super tax’ on the affluent class to re­duce the budget deficit.

“The purpose of impo­sition of ‘super tax’ is to reduce the budget defi­cit in order to end reli­ance on foreign assis­tance,” said the Finance Minister while winding up the debate on bud­getary proposals.

About the Imran Khan-led government’s economic policies, the Finance Minister com­mented that the coun­try was near to default but now it was on the path to progress.

Giving details of the super tax, the minis­ter explained that indi­viduals and companies earning Rs 150 mil­lion annually will have to pay one percent ad­ditional tax, two per­cent additional tax on Rs 200 million income, three percent on Rs250 million income and four percent addition­al tax on Rs 300 mil­lion income. “This next tax will be valid only for this term (one year),” he announced.

About the budgetary proposals by the oppo­sition, Miftah said most of the recommenda­tions suggested by par­liamentarians in their speeches would be in­corporated into the bud­get. Clarifying the taxes announced by Prime Minister Shehbaz Shar­if, he said that no indi­rect taxes had been im­posed and neither had any tax been imposed on consumption. “This govern­ment has taxed the rich segment of the society,” he said announc­ing that tax would be imposed over the companies owned by the sons of PM Shehbaz.

About his own company, the Minister said his companies will also pay Rs200 million more in taxes. “If we are asking others to pay more taxes we also contrib­ute in this cause,” the finance minister said. He also said the government had committed to the IMF that the primary deficit of Rs1,600 billion recorded this year would not only be brought down but also there would be a surplus of Rs153 billion.

“An additional tax of 1pc would be imposed on individ­uals and entities whose annual income exceeded Rs150 million on account of poverty allevia­tion,” he said mentioning that those with an annual income of over Rs200 million would be subject to an additional tax of two percent.

He said those earning more than Rs250 million to three per­cent and those having an annu­al income of more than Rs300 million would be taxed four per­cent of their income. “This will be onetime tax for the fiscal year 2022,” he said mentioning that this government has identi­fied 13 sectors that had earned significant profits this year.

He said they have decided that companies that have an income of more than Rs300 million will be subject to a super tax of ten percent for a year.

The minister said the compa­nies working in cement, steel, sugar, oil and gas, fertiliser, LNG terminals, textile, banking, au­tomobile assembling, cigarettes, beverages, chemicals and air­line sectors would have to pay this tax.

He said the entities in the rest of the sectors would have to pay this one-time additional tax amounting to four percent of their income. The Minister said that there were around 9 mil­lion retail shops in the country and this government wanted to bring 2.5 to 3 million of these shops into the tax net.

“A new scheme had been in­troduced under which the in­come tax and sales tax that these shops have to pay have been fixed with their electric­ity bills,” he said adding un­der this initiative, small shops would have to pay a fixed tax of Rs3,000 monthly and big retail­ers Rs10,000. He said retailers who were dealing in gold and had shops of 300 square feet or less would have to pay a fixed in­come and sales tax of Rs40,000. And for bigger shops, the sales tax had been reduced from 17pc to 3pc, he added. He said that a similar scheme of fixed tax would be announced for real­tors, builders and car dealers.

“This tax is on their income and not expenses, and this is why it will not increase infla­tion but increase our revenue,” he said. About the oil marketing companies, the finance minister said these entities had to pay a minimum tax of 0.75pc, which had been reduced to 0.5pc. He said, 5pc commission was cut on outgoing indenters at the time of receipt. “This has now been reduced to 1pc.”

He said Overseas Pakistan who had a NICOP would be considered included in the list of active taxpayers. Where­as, they would not be charged any additional taxes while buying a property. The Min­ister said families of martyrs and war-wounded individuals would be exempted from tax on income from plots, Ismail said and added that sales tax on skin and hides and surgical instru­ments had also been removed.

He also said that the tax target, which was initially set at Rs7.004 trillion had been increased to RS7.47 trillion. At the same time, he added, the target of non-tax revenue that was set at Rs2 tril­lion had been revised down to Rs1.94 trillion. He said the gov­ernment intended to introduce a bill for exempting the residents of these areas from paying in­come tax. Companies and indus­tries operating in these areas would be brought into the tax net, he said. The minister said as a result of this “farmer-friend­ly” budget the country would be­come self-reliant in the produc­tion of edible oil.