Under its new economic strategy, the federal government has suggested raising the 5% tax on manufacturers in order to boost the country’s exports.
According to the Express Tribune, manufacturers that earn more than Rs. 50 million per year and export less than 10% of their output would be subject to a 1-5 percent special income tax under the new plan.
The recently proposed special income tax would replace the 4% super tax and apply to incomes of Rs. 50 million rather than Rs. 150 million as the latter does.
According to reports, certain businesses would be helped by the offer of tax exemption via a negative list. According to experts, the government is attempting to raise cash to offset the Rs. 75 billion losses it is incurring while facilitating industries with smaller earnings. Traders, bankers, stock market brokers, real estate agents, and transporters are among them.
Miftah Ismail, Federal Minister of Finance and Revenue, confirmed and endorsed the government’s plan in an interview with the media.
It should be noted that, under the International Monetary Fund’s (IMF) requirements, the government cannot grant tax relief to sectors; however, the government has promised the IMF that any relief provided to a particular industry will be offset by tax relief provided to other sectors.
According to sources, the administration is exploring two alternatives for providing tax relief to these five industries.
The first technique is to impose two taxes on other sectors to compensate for the aforementioned five sectors, whilst the second alternative is to just offer relief to merchants and real estate dealers in the first phase, which will be implemented by August 29.
According to experts, raising the tax would increase unemployment in the nation and burden the manufacturing sector, which already earns three times the income of its overall economic contribution.
The PM also agreed to a plan to impose a tax on cigarettes ranging from Rs. 100 to Rs. 300.
On the contrary hand, the administration is considering allowing imports with high taxes. In this context, the finance minister proposed that the Prime Minister lift the import prohibition on 860 product categories and instead impose substantial regulatory charges.
However, Shehbaz Sharif has not yet given his consent to the proposal.
