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Saturday, July 13, 2024  
07 Muharram 1446  

Tough decisions taken for sake of economic growth, says Aslam

Finance ministry spokesperson dismisses impression that basic items’ prices are being increased due to tax measures
Finance Ministry spokesperson Muzammil Aslam addresses a press conference at the Karachi Press Club on Saturday. Screen grab
Finance Ministry spokesperson Muzammil Aslam addresses a press conference at the Karachi Press Club on Saturday. Screen grab

Muzammil Aslam, spokesperson Finance Ministry, said on Saturday that the government has taken some tough decisions for sustainable economic growth; however, marginalized segments of the society will remain protected from these tough new policy measures taken in the supplementary Finance Bill 2021.

While addressing a press conference here on Saturday at Karachi Press Club (KPC), he said that despite the multiple challenges, particularly Covid-19, the country’s economy has performed well during 2021 and is moving in the right direction with the support of the government’s policies.

He informed that under the Supplementary Finance Bill 2021, for the first time in history, the Federal Board of Revenue (FBR) has taken significant tax policy reforms in the larger interest of the economy. The tax policy reforms will not hurt the general masses of the country, but they are for the elite class that is enjoying a number of tax exemptions on luxury items.

“Finance Supplementary Bill will not put any burden on the poor people as tax is being imposed on branded imports and luxury items that are mainly used by the elite class of the country”, he added.

He further said that inflation is increasing all over the world because of higher commodity prices and the same situation was seen in 2008.

He dismissed the impression that basic commodities’ prices including bread prices are being increased because of tax measures and said that big bakeries are also selling pizza and other expensive items, besides eggs and bread.

Muzammil said that the IMF had asked to impose a tax of Rs 700 billion, but the government imposed only Rs 350 billion taxes.

He mentioned that tax exemptions amounted to Rs. 343 billion were being given to the various segments and groups of the industry for the past 70 years. Now, these exemptions are being eliminated under the supplementary Finance Bill 2021 as the elites were major beneficiaries of these exemptions.

“As the common man was not the beneficiary of these exemptions, the marginalized segments of the society will not be affected with these new tax policy reforms. In line with the vision of Prime Minister Imran Khan, economically and marginalized segments will remain protected from the tax measures”, he said.

Under the new tax policy, commodities of daily use by the common man including food items, dairy products, clothing, and a number of other items are still tax-free in the domestic market, he added. Productive sectors of the economy have been saved from any negative impact of proposed tax reforms, he said.

In addition, various items, which may somehow attract adverse impact of tax reforms, have been identified for targeted subsidies to support the common man, he mentioned.

Muzammil mentioned that tax exemption is retained on basic food items including import or supply of rice, wheat, meslin and local supply of fruits and vegetables, imported vegetable and fruits from Afghanistan, local supply of beef, mutton, poultry, fish and eggs, sugarcane and beet sugar. In addition, zero-rating will be retained on milk and fat-filled milk.

The agricultural sector is largely contributing to the economic growth and to support this sector, exemptions and preferential treatment are still available to the agriculture sector.

“The fertilizers would continue to enjoy a reduced rate of 2 percent at the output stage. While fertilizers inputs would continue to enjoy multiple reduced rates as presently available so that production cost of the fertilizers does not go up”, he added.

Similarly, tractors to the farmers would continue to be sold with a reduced sales tax rate of 5 percent, and pesticides for agricultural purposes would continue to be sold with the exemption of sales tax.

Keeping in view the vision of the Prime Minister, Muzammil said that FBR is most generous and lenient with the pharmaceutical sector and pharma firms have been treated like exporters to ensure the release of refunds within 72 hours. Pharma firms will now be able to claim refunds on packaging material, utilities, and sundry expenses. Previously, they were not allowed to claim this. With these steps, the prices of medicines are likely to reduce in the domestic market, he said and added that expectedly, the prices of medicines in the retail market may come down approximately by 20 percent.

In the education sector, he informed that FBR is retaining tax exemption on educational textbooks, stationery items, and locally manufactured laptops and personal computers.

He said that the country’s exports are gradually increasing and likely to touch $30 billion by end of this fiscal year, while, inflows of home remittances would be about $32 billion.

The story was originally published in Business Recorder on January 02, 2022.

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