Relief but no relief

Government on Saturday approved reduction in the price of petroleum products but on the other hand raised the General Sales Tax (GST) on it from 22 per cent to 27 per cent. Federal Minister for Finance Ishaq Dar announced a five percent increase in GST on petroleum products. Dar said that the increment would enable a recovery of 12 billion rupees. The minister, however, went on to say that the ministry would still face a loss of 40 billion rupees.

Earlier this year, a month before government increased the GST rate on all petroleum products from 17 per cent to 22 per cent, hoping to increase tax collection by an estimated Rs48 billion on an annual basis.

Business community has opposed the imposition of 5 percent additional GST on petroleum products and called for urgent withdrawal of this anti-business and anti-people decision. In the wake of more than 55 percent decline in oil prices in the international market, people were expecting from the government to pass on its full benefit to them, but the further hike in GST on POL products would deprive them of any such relief. In comparison with other countries, 17 percent GST in Pakistan was already amongst the highest in the world as compared to the average around 12 percent GST in Asia. However, the government has further increased this tax on POL products taking it to 27 percent which has no precedent in the world.

Would government provide relief to the general public only after the pressure of protests? FBR’s inefficiency and incapability to meet its tax collection target resulting to increase the GST that is also a violation to the promise made to the IMF. Instead of increasing taxes on POL products, government has many other better options to improve its revenue collection.

 

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