The government of Pakistan has promulgated two ordinances and also issued a mini budget, to comply with the conditions of the IMF. The withdrawal of corporate tax exemptions of Rs140 billion was a major condition by the IMF which the government had to comply with, and then the autonomy granted to Nepra has given it a near-complete carte blanche to increase power tariffs in the country.
Now whatever Nepra recommends in terms of power tariffs the government will be bound to follow its advice. The new burden of over Rs700 billion on power consumers will be like yet another mini budget that is being imposed on the people of Pakistan.
Though the government has been able to receive the next tranche of the bailout package from the IMF, it will have a debilitating impact on common people of the country. This will also have major implications for the remaining three months of this fiscal year.
The 36 tax exemptions that the government has withdrawn will generate more revenue for the government but our business and industrial sectors which are already under tremendous pressure will have to face a lot of hardship to sustain themselves in the national and international markets.
Even non-profit organizations (NPOs) will lose their exemptions, which will no doubt affect a lot of such organizations that are working in social sectors such as health, education, water, and sanitation. Some select NPOs have retained their tax exemptions. The government will give tax credits to NPOs based on compliance levels but that will require much more stringent rules to follow and will hamper their smooth working.
The introduction of over 75 amendments to tax laws in one go is perhaps the single most sweeping overhaul of our tax system in recent history. The government has also withdrawn tax exemptions for fresh graduates and investment companies. For fresh graduates in the country now it will be more challenging to set up a new business or start a new venture.
Keeping in view the rampant unemployment that has increased manifold during the past three years or so, the tax exemption for fresh graduates was a major incentive that stands withdrawn now. This flies in the face of the PTI’s promises to generate millions of jobs for the youth of Pakistan.
New investment will also face a tougher environment and may end up somewhere else. The government has not even spared textbook boards and private power companies. With new taxes on these entities, education will likely become even more expensive and consumers will be paying much more for the power they consume.
The film industry that is already reeling under an unfavorable atmosphere for art and culture in the country, will also come under the hammer. What all this does at the end is create even more hardships for the common people. Can we hope the government comes up with a plan to at least enhance livelihood opportunities for the people?