KARACHI:
The Supreme Court of Pakistan passed a judgment that the Super Tax on large-scale industries should be restricted to 4% instead of 10%. The International Monetary (IMF), international financial institutions, and even our own economists have urged the federal government to raise revenues through direct taxation on all sources of income, above a threshold, instead of indirect taxation.
Today Pakistan is on the brink of financial bankruptcy with imminent default, yet the elite capture continues to prevail. Last year, the Prime Minister levied a Super Tax to increase revenues through direct taxation on 13 large-scale industries, with annual income exceeding Rs150 million in a year. The target was to achieve about Rs215 billion through super tax. In Norway, the employers’ share of sustaining social security benefits is 14.1% which increases to 19.1% for annual income exceeding 750,000 Norwegian Krone. In 2023 the Norwegian government proposed that companies pay a 22% tax in addition to the income tax paid by individuals.
In Pakistan, there are no social security welfare schemes for the most deprived sections of society. The National Savings Centre levies almost 30% of non-filers’ minimum profits that they receive by investing their savings. Even profit from Pension Benefit Scheme and Behbood Saving Scheme eligible for senior citizens is subject to Withholding Tax ranging from 10% and more if the amount exceeds Rs0.6Million in a year. The vulnerable sections should be facilitated through welfare schemes while the rich should be taxed to improve income distribution and raise government revenues.
Malik Tariq Ali
Lahore
Published in The Express Tribune, February 21st, 2023.
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