Sales tax

Earlier this month, India finalised 4 rates for new sales tax. This has moved India a step closer towards the imposition of GST on all goods and services – a step that may transform Asia’s third largest economy into a ‘single market zone’. Likewise, for Pakistan too, we need to ensure that our GST and all other forms of federal duties and levies are ‘harmonised’ nationwide. For this, the following measures can be adopted by the government. The standard GST of 6 percent on the products consumed disproportionately by the poor can be levied. The standard GST of 16 percent on all other products and services should be levied. Super GST of 26 percent plus should be imposed on harmful products such as energy or fizzy drinks, tobacco, betel, or energy products such as petroleum products, natural gas, to curb excessive consumption. These rates should be applied nation-wide. All services should face the GST of 16 percent. Strict penalties should be instituted in the case of GST evasion either by business or by an individual.

Further, taking steps for our ‘optimal tax mobilization target’ is significant to combat our main economic issue i.e. ‘growing local and foreign debt and the need to avoid a serious debt trap’. To conclude, our professional organisation, the FBR, the State Bank of Pakistan and economic think-tanks should guide the federal government in the right direction for policy-making and implementation.

Abbas R Siddiqi

Lahore