A rise in taxes means a fall in people’s incomes. New taxes being levied by the PTI-led government show that previous regimes had left the state coffers precariously depleted because of their alleged corruption, mismanagement, inefficiency and populist policies. After the government announced a tax-heavy budget a few days ago, on June 14 the National Electric Power Regulatory Authority (Nepra) allowed a uniform increase of Rs1.494 per unit in tariff for all the distribution companies (Discos) of ex-Wapda to recover Rs189.64 billion from consumers. Nepra has justified the rise in the amount of tariff on the ground that higher international oil prices, inflation and currency depreciation could necessitate further price hikes and put consumers to a sudden higher price shock.
Consumers will pay an additional Rs1.49 per unit for 15 months from July 1. This is in line with a staff-level agreement with the IMF. Lifeline consumers, having monthly consumption of less than 300 units, will be exempt from the new increase in power tariff. The government plans to give a subsidy of Rs52 billion on this count. It has made an allocation of Rs191 billion for Discos for ex-Wapda and Rs59.5 billion for K-Electric, putting the total power sector subsidies at Rs271 billion for the next fiscal year. It recently announced special subsidised rates for industrial consumers.
Recently, we have seen increase in many taxes and Federal Board of Revenue Chairman Shabbar Rizvi has announced that he will make best efforts to recover taxes and deal sternly with tax evaders. In Pakistan, tax evasion is rampant. A sizable majority don’t pay taxes. We have a very low tax-to-GDP ratio. There is a dire need to eliminate the problems of tax evasion and tax avoidance. Greater tax collection is necessary to fund development programmes. We hope the government of Prime Minister Imran Khan will keep taxable capacity of the people in mind in its taxation policy.
Published in The Express Tribune, June 17th, 2019.
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