Claims of government fall flat regarding country’s economic recovery as it has decided to increase the import duty by 10 percent on 313 items. According to government these items fall in the category of ‘luxury goods’ but list also includes cheese, butter, shampoos. An additional one percent customs duty has been imposed on all imports.
It is a reality that Federal Board of Revenue has failed to increase the tax net by implementing direct tax and all the focus is on increasing indirect taxes. Earlier, addressing in the IMF review meeting, Finance Minister Ishaq Dar claimed that government is not going to impose new taxes on the public, but analysts were speculating that government would increase tax. On Monday speculations become reality and Economic Coordination Committee of the cabinet met to approve around Rs 40 billion worth of new taxation proposals.
The governments failure of direct taxation has lead it to bring a new mini-budget. FBR always find ways to meet its targets by imposing indirect taxes. These taxes have proved that country’s financial affairs are being run on ad-hoc taxation to bring makeshift financial stability. Ishaq Dar’s tall claims of taking the ship of economy out of troubled waters fall flat. Government has come up with another small budget after almost five months of Budget 2015-16, which indicates that government has completely failed to come up with a reasonable budget in June. Government is already in negotiations with traders over withholding taxes and now more it finds easy target by implementing indirect taxes.
Only good news is that these taxes mean that the government has not increased the price of petroleum products further. It has become clear that the IMF was promised that Rs 40 billion would be collected through tax measures before November 30.
FBR has failed to increase the tax net by implementing direct tax and all the focus is on increasing indirect taxes.