Pakistan PM Sharif announces 10 percent ‘super tax’ on large-scale industries

Pakistan Prime Minister Shehbaz Sharif on Friday announced a 10 percent super tax on large-scale industries like cement, steel, and automobile, a move he said was aimed at tackling spiraling inflation and saving the cash-strapped country from going bankrupt. High net worth individuals will also be subject to a poverty alleviation tax, Sharif announced after chairing a meeting of his economic team on the federal budget for the next fiscal year 2022-23. Our first motive is to provide relief to the masses and to reduce the burden of inflation on the people and facilitate them, Sharif said, Geo TV reported.

Pakistan Prime Minister Shehbaz Sharif on Friday announced a 10 percent "super tax" on large-scale industries like cement, steel, and automobile, a move he said was aimed at tackling spiraling inflation and saving the cash-strapped country from going ''bankrupt.'' High net worth individuals will also be subject to a ''poverty alleviation tax,'' Sharif announced after chairing a meeting of his economic team on the federal budget for the next fiscal year 2022-23.

"Our first motive is to provide relief to the masses and to reduce the burden of inflation on the people and facilitate them," Sharif said, Geo TV reported. "Our second motive is to protect the country from going bankrupt,'' he said, adding that it has been devastated due to the ''incompetency and corruption'' of the previous Imran Khan-led government. The sectors on which this "super tax" will be levied include cement, steel, sugar, oil and gas, fertilizers, LNG terminals, textile, banking, automobile, cigarettes, beverages, and chemicals, according to the Dawn newspaper. Sharif explained that other motives included stabilization of the economy. "These aren't just words, this is the voice of my heart, and InshaAllah we will be able to achieve all these targets," he said. He said history had witnessed that in difficult times, it was the poor people who always made sacrifices. ''Today, it is time for the affluent citizens to do their part. It is their turn to show selflessness. And I am confident that they will contribute fully to play their part,'' Sharif said.

He said the institutions whose job is to collect tax should take from the rich and give to the poor.

Those whose annual income exceeds Rs 150 million will be subject to 1 percent tax; for Rs 200 million, 2 percent; Rs 250 million 3 percent; and Rs 300 million will be taxed 4 percent of their income, the Dawn report said. Meanwhile, the Pakistan Stock Exchange's benchmark KSE-100 index witnessed a 4.81 percent drop after Sharif's announcement, it said. The premier on Thursday had warned that the country may witness more difficult times as it struggles to steer itself out of the ongoing economic crisis.

Sharif said that his government faced an uphill task to revive a stalled assistance program by the International Monetary Fund (IMF) due to the broken promises with the global lender by the previous Imran Khan-led government.

Sharif, who came to power in April after Khan's government was toppled through a no-confidence vote, made it a priority to revive the IMF program as it would unlock several avenues to access loans from different sources.

After many meetings and hiccups, the two sides on Tuesday night reached a broader understanding to restore the package, providing a much-needed boost to Pakistan's economy.

The premier, however, said that the economic situation would not improve overnight once a deal with the IMF was signed.

''Will prosperity come overnight after an agreement is signed? Not at all, (but) we have to strengthen our financial position," he said.