The government of Pakistan proposed a 2% tax increase for savings accounts and profit accounts.
The government of Pakistan has proposed 2% for the people who own profit accounts and savings accounts to increase the revenue base and cover the tax shortfall for the next FY. It is no surprise that FBR is increasing taxes on almost all sectors because FBR has failed to get expansion in the tax net and failed to get the tax net expanded. It is no surprise either that the FBR cannot convince the IMF because they know that the FBR will go for a shortfall next FY because people do not trust the FBR. There are many reasons not to trust the FBR, but the major reason for not trusting the FBR is the harassment and unfair tax claims. These two are the major reasons why people do not want to come into the tax net and the FBR fails to expand the tax net. However, the media claim that this 2% proposed tax is not the final decision, and it is expected to be confirmed next week. Moreover, the media also reported that these 2% taxes on savings accounts and profit accounts will be diverted to give relief to the salary classes, as they are the highest taxpayers in Pakistan. The salary class in Pakistan pays more in taxes than exporters and business people.
Additionally, FBR is now suggesting taxing those people who use debit cards to withdraw cash. A 1.2% tax will be implemented; for example, if a person is taking out 120,000 PKR, then the deduction will be 1200 PKR. It is expected that the number of taxes will be increased, as the FBR is also suggesting increasing taxes on cars and introducing GST on cars, which will be 18% on local manufacturing. The IMF has urged the FBR to allow 5 old car imports, which were stopped by the FBR to save forex reserves and make local industry competitive. The IMF think-tank suggests that allowing 5-year-old car imports in Pakistan will allow Pakistan to collect more taxes. Pakistan is also thinking of increasing the levy on petrol items by more than 100 PKR, which will make things or goods more expensive in Pakistan. It is also expected that those people who are living on pensions will also face 2% taxes as well. Furthermore, additional 2% taxes on savings and profit accounts will help the FBR to increase revenue as well. It is also said that FBR has proposed that people will have to pay PKR 3 rupees for petroleum products if it is paid in cash.
