What is

Super Tax?

X
TA
ER
UP
S
www.facebook.com/thebriefaffairs
Source: www. thenews.com.pk
What is
Super Tax?
The government used the
term ‘super tax’ that got
attention of social media
users who were seen
inquiring about this new tax.
www.facebook.com/thebriefaffairs
Prime Minister Shehbaz Sharif announced super
tax on large-scale profitable industries of
Pakistan to revive the IMF bailout package and
to resolve chronic balance of payment crisis.

The government used the term ‘super tax’ that

got attention of social media users who were
seen inquiring about this new tax. Economic
experts have shared their views on imposition of
the tax and its effects on economic condition of
the country, while opposition party Pakistan
Tehreek-e-Insaf (PTI) has claimed that the super
tax would bring a wave of inflation in the
country.
www.facebook.com/thebriefaffairs
Historically, the super tax used to be a part of the
income tax ordinance 1979, was temporary and
penalised for specific urgency. But policymakers
relied more on super tax to meet tax collection
targets.

Taxation expert Ashfaq tola defined super tax as,

“It’s a special tax that is imposed along with usual
taxes.” Another expert Dr. Ikramul Haq was of the
view that governments impose super taxes, but the
reason behind aren’t told to the public. He said as the
government has given the reason behind the new tax,
saying it would be used for poverty alleviation in the
country, it would be called as ‘levy’ now and should
be passed from both the Houses.
www.facebook.com/thebriefaffairs
As a desperate move to revive the IMF program, govt is
taking unpopular measures, including mammoth raise in
petroleum, diesel, gas and power tariff hike to phase out
energy subsidies, leading to economic meltdown and
stagflation. Therefore, government imposed one-time
10 percent tax named super tax on large-scale industries
in retrospective effect on outgoing fiscal year to raise
over Rs400 billion fiscal deficit financing.

According to Finance Minister Miftah Ismail, these

tough measures needed “to phase out the previous four
record budget deficits under PTI govt”. Ashfaq Tola
said this tax is imposed during fragile economic
conditions and governments can also impose it during
economic emergencies.
www.facebook.com/thebriefaffairs
Ikramul Haq said the government has imposed it to
increase tax collection; however, he termed it a
burden on tax-paying sectors. “There can be other
ways also to collect money such as removing tax
relief in the budget or reducing non-development
expenses.” He proposed that agriculture tax,
wholesalers, and traders should be brought into the
tax net, rather imposing new taxes on already tax-
paying sectors.

According to the government, super tax will be

levied on 13 sectors, which include sugar, steel,
cement, oil and gas, fertilizer, cigarettes, chemical,
automobiles, banks, textile, LNG terminals and
beverages, airlines.
www.facebook.com/thebriefaffairs
In addition to the above, the poverty alleviation one-time
tax levied in the Finance Bill 2022 as: 1pc tax on the
income between Rs150 million to Rs199.99 million – 2pc
tax on the income between Rs200 million to Rs249.99
million – 3pc tax on the income between 250 million to
299.99 million – 4pc tax on the income of 300 million &
above.

Federation of Pakistan Chambers of Commerce & Industry

(FPCCI) acting chairman Shabbir Mansha termed the
decision to impose super tax “destructive” for industries.
“Industries are already burdened with gas, electricity, and
high interest rate, and this super tax will retard development
of the sector as well as overall economic development,” he
added. He was of the view that companies would transfer
burden of the super tax on the public, which would fuel
inflation across the country.
www.facebook.com/thebriefaffairs
Ikramul Haq warned of negative impacts on
industrialisation and corporation because of this
new tax. The newly-elected govt chasing
politically and economically a difficult balance
between fulfilling the IMF’s tough
conditionalities and meeting public expectations
in the election year.

This seems an uphill task for the policymakers to

post high economic growth of 5 percent and
controlling CPI inflation to 11.5 percent and fiscal
deficit to 4.9 percent simultaneously under
ongoing inflationary phenomenon which is a
difficult proposition.
www.facebook.com/thebriefaffairs
The Planning Commission has projected growth
of 5 percent for 2022-23 as a result of
“contractionary” fiscal policies to be pursued in
the upcoming budget, effects of high inflation and
fears of rising cost pressure due to anticipated
hike in the policy rates and deterioration in
current account deficit (CAD) would be a
challenge for next year.

This super tax would negatively affect the

corporate sector, which is the backbone of the
financial & economic engine. It is expected that
this could increase layoffs, and poverty might rise
under ongoing hyperinflation.
www.facebook.com/thebriefaffairs
It will also accelerate the cost of industrial sector
facing brunt of monetary tightening and historic
energy and petroleum prices and further hit
private sectors borrowing capacity as
competitiveness has been deteriorated with rest of
the world. The government has increased
petroleum prices thrice in a month and the prices
of gas and electricity are also on a surge. In this
current economic situation, it’s yet to be
measured the impact of this super tax in coming
days. A user wrote the government has to ensure
two things; one the industries don’t exploit the
public by collecting this tax by them, and second
to stand by their decisions.
www.facebook.com/thebriefaffairs