KARACHI:
In the budget for the fiscal year 2022-23, the government raised taxes on the already over-taxed banking industry. During the last financial year, the banks were taxed at the rate of 35% plus 4% super tax i.e., a total tax of 39%. In the current finance bill, the government will tax the banks at the rate of 49%. The government considered the 39% tax as the base tax rate and applied an additional 10% super tax making it 49%. Instead, it should have considered 35% as the base tax, deducted last year’s super tax, and added 10% to make it 45%.
Naturally, the banking industry is not happy with the new tax rate as it will affect its earnings and be detrimental to the economy in the long run. Perhaps, the government has imposed the super tax because it believes that the banking industry earns enormous profits. However, the banking industry will now be compelled to adopt different measures to offset the impact of these taxes. It will be a challenging task because they are expected to continue delivering financial services at affordable rates.
The banking industry has urged the government to review the new tax rates because the banks may fail to produce the government’s desired results. Also, the public will have to face the brunt of this too. The government must look at other industries that can help fill its coffer without directly burdening the masses.
Syed Ovais Akhtar
Karach
Published in The Express Tribune, July 19th, 2022.
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