Pakistan Govt imposes 10% super tax on big industries
The Pakistan Stock Exchange (PSX) crashed on Friday minutes after Prime Minister Shehbaz Sharif a 10% super tax or “poverty alleviation tax” on major Pakistani industries.
“We have decided, today, to impose a 10% super tax, meaning a poverty alleviation tax, on major industries,” Sharif said after a meeting with his economic team on Friday.
The prime minister said his government had proposed to tax people who earned over Rs150 million annually at 1%, those who earned over Rs200 million every year at 2%, those who earned over Rs250 million annually at 3% and those who earned over Rs300 million at 4%.
Which industries will be impacted?
The government has imposed 10% super tax on 13 industries including:
- Cement
- Steel
- Sugar
- Oil and gas
- Fertilizers
- LNG terminals
- Textiles
- Banking
- Automobiles
- Cigarettes
- Beverages
- Chemicals
- Airlines
These 13 industries will be subjected to 10% tax in total while all the remaining industries will face a 4% additional tax.
Market reaction
The benchmark KSE-100 index was down 2,053 points or 4.8 percent at 12 noon on Friday.
“If KSE-30 Index continues to trade 5%, above or below its last day closing index value for consecutive 5 minutes, the trading in all securities shall be halted for such duration as specified by the Exchange,” according to PSX.
Experts said massive taxes were the major reason behind the dive. “The market has reacted very negatively because it will severely hurt corporate profitability,” Intermarket Securities’ head of equities Raza Jafri told Dawn.
The super tax comes as a shock to the local business sectors after record surge in fuel prices, power tariffs and other taxes as well as austerity measures/