The current economic situation doesn't allow for reversal of GST rate, says finance minister. PHOTO: AFP
ISLAMABAD: The government has decided not to withdraw the proposed one per cent increase in general sales tax (GST) for fiscal year 2013-14.
Finance Minister Ishaq Dar, winding up the budget debate in the National Assembly on Saturday, said that he had carefully reviewed the opposition's recommendations on the increase in GST but the country's economic condition currently did not leave room for withdrawal of the increase.
Dar said that there was a Rs374 billion revenue shortfall in Federal Board of Revenue (FBR) collections during the past fiscal year. This year begins with the biggest budget deficit.
"Other countries apply 17 % GST rates, just like us," said Dar.
However, the finance minister assured the house that the government will withdraw the one per cent increase if the resource situation allowed for it.
The finance minister told the house that minimum wages for labour had been increased from Rs8,000 to Rs10,000.
According to Dar, the government incorporated 21 recommendation proposals from Senate into the finance bill this year. This has been a first in Pakistan’s history, he claimed.
COMMENTS (27)
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FM, please don't tell a lie, it is from 0% to 17% in different countries but not on basic necessities of life like clothes and medicine.we should be realistic not cruel.
there are two problems in Pakistan with taxes. 1) 70% Pakistanis do not pay their taxes and those who pay them are paying nominal part of the due taxes , by using unfair means, except the salaried class, who might have also not payed if it was not deducted from their pays. 2) The taxes payed by the people are not used properly, basic sevices are not provided, corruption is the order of the day everywhere, in short the govt is not peforming its duties for which citizens pay taxes. In turn people do not pay their taxes because they think that their money is not used for them. Therefore, if the govt is sincere it should take two steps. one instead of raising taxes on thse honest citizens who already pay their taxes concrete steps should be taken against the non-payers to increase the tax revenue and second, governance should be made good so that tax money is used properly and all basic services are being provided to the citizens. It will instal the trust of the citizens and they would willingly pay their taxes.
@Muhammad imran: No we don't pay 17% tax in Canada, GST is 5% where as each province charge anywhere between 0% to 10% making the maximum 15%. Get your facts straight my friend.
@jibran: "other countries" doesn't necessarily mean "all countries/US".
@Anees: They'll take the easy way and leave the citizenship of Pakistan.
@Bilal: One day old baby pays 17% tex...... What tex r u talking about.....????
Sick and tired of people comparing pakistan with US, please compare our GST with the likes of india etc and u will find it equal..moreover please note the following - Agricultural and real estate taxation is domain of provincial governments, talk to me when PTI led KPK government raises these taxes, - Broadening the tax base is in their agenda, give them some time dont expect them to have a magic wand to bring all the non tax payers into the tax net in a second. BTW They have already started issuing notices to tax evaders and they are using NADRA db and SBP to identify such persons - FYI highest salary slabs have been taxed the highest
@Shaami: @Faheem: The question here is not about income tax. While our accountant minister is happily keeping his buddies out of the tax bracket, he is increasing sales tax which is not proportionate taxing. On top of it, he wrongly defending 17%. For God sake, have mercy on the poor, or stop reciting jalib's poems.
Oh Mian Sahab, Great job! Seriously you're choice of finance minister is so comendable!
In case anyone still has any doubts about Mr. Sharif's trustworthiness and competency, here is an excerpt from N league's manifesto.
Inflation will be brought down to single digit in the range of 7 or 8% by: a. Limiting government borrowing. b. Decreasing tax rates. c. Reducing energy shortage and cost of producing energy.
The manifesto really is a joke to me. The government is going to the IMF to borrow MORE MONEY! It has INCREASED taxes! and reducing energy shortage? He has already told the people to not count on him for that. This is our great leader.
@Muhammad Ali Siddique Supreme Court verdict was against GST Collection before approval of parliament it's a legislative matter rather then Supreme Court going against parliament
What ishaq dar is committing is to get it approved from parliament and then enforce it
@jibran: In US, tax on income is very high.
@jibran
We pay 17% sales tax in Canada and in a lot of other countries indirect taxes are very high. I believe if Pakistan can get the rich of this nation pay tax we would be able to withdraw to lower GST until then the we'll have to rely on these regressive taxes to support most of our expenditures
The problem is how much tax these Fate-makers of people themselves pay. The people fall ( rupee), they rise(dollar). The day when they will learn how a common person spend a month on average salary of 6 thousand, the best budget then will come.
Any sales tax is regressive tax and it hurts the common people either with fixed or low incomes. It would have made sense if they would increased the sale tax on luxury cars and other luxury items and above all tax the agricultural sector, get rid off the subsidies to those with large land holdings.Also bring those into the taxation net who skirt paying their fair share of taxes, It is shameful affairs in Pakistan that those who could and should pay taxes are the ones get away by not paying anything. Remember, almost 60% or more of the National Assembly Member in the PPP government did not pay any taxes and yet they levied taxes on others. Let us jail those people who are cheating and avoiding their fair share of taxes and make an example of them regardless who they are military or civilians. There will be no need of GST ( fancy name), I will call it sale tax if the tax base is broadened and corral the cheaters and the dodgers into the net. It will take sincere leadership who do not have their self financial interest in the budget but see the country comes out of this economic mess, the previous government left for others to worry about.
I don't understand why the discussion is complicated. Keep the rates where they are but start collecting from everyone. There have been so many press releases from FBR in which they claim to have identified tax evades but still no action.
Why is he just increasing more tax on the people who are already paying tax?? why not put resources on expanding on the tax payment database starting with politically backed factories!
@Bilal:
lOl.. And are we really getting ANYTHING against the taxes we pay?? I mean seriously thats the height of dumbness. I urge you to google first abt the taxation system and the benefits usually citizens get in return...!
And YES we will continue to criticize govt for EVERY WRONG ACT. Either one should act on the manifesto or do not deceive people by showing them a brighter picture..!
@Bilal:
Just tell me since when did we have a good system of Roads, Schools,Hospitals, Security. What does the Govt do without the tax it collects currently? Everything in the country is in shambles. Public schools and hospitals are a joke. People are dying like animals everywhere, where is the security? Nothing is going to change even if the Govt imposes 100% GST until corruption is brought to an end.
@jibran: But in America around 90 pecent people pay taxes while in Pakistan around 1 percent people pay direct taxes. So kindly dont compare the two nations. When everyone pay taxes then the rate of taxes automatically goes down but that is not the case with our country.
@Bilal: Typical response by the N league. How about increasing the tax net so more than 1% of the Pakistani population actually pays taxes instead throwing the entire burden on poor. You can relax at home typing away at your little computer but the poor of this country use none of the things that you've listed. So why indeed should they pay for the rich to use these services.
@Jibran Its extremely unfair to compare US and Pakistan. Us is the biggest economy in the world despite all their economic problems meanwhile Pakistan is one of the poorest countries in the world. We can't have the same economic policies as a developed country like the US.
What Pakistan needs the most is an agricultural tax but that doesn't seem likely in the near future.
@Bilal...just to add to your very valid comment.... and those who do pay taxes...we will give you nothing and make sure that you pay more!!
@ET please don't filter this comment We want roads but We dont give any Tax We want schools.thanks but dont Tax me We want hospitals but I'll pay zero Tax We want secure society but Tax what Tax We want no corruption but also no Tax We will criticise gov for every wrong. (Technically we want everything without a price tag,neither we'll work for it we just want everything to be absolutely free)
“Other countries apply 17 % GST rates, just like us,” said Dar.
Which other countries? In the US, it is decided by individual states and not the federal government. The state I am in, it is 7%, and is not on clothes, medicines, and unprocessed food items. Stop lying to the people of pakistan.
The following editorial of Business Recorder says it all: http://www.brecorder.com/editorials/0:/1201550:nawazs-political-capital-under-threat/
So you don't want to comply with the verdict which has been passed by the Supreme Court of Pakistan?
Are you in a mood to become another Syed Yousuf Raza Giliani?
If yes, thanit is okay.
Carry on and yiu will see the result.