ONE of the most heartless revenue measures that the government has recently resorted to is a tax on the profit earned by pensioners and widows on Behbud Certificates and Pensioners Benefit Account of the National Saving Scheme. The tax was announced recently through a circular issued by the FBR, and is chargeable at 10pc of the profit earned. People who invest in these schemes are amongst the most vulnerable to price or income shocks, however mild. Their incomes are fixed for years on end, while inflation eats away their buying power year after year. They are no longer able to be members of the workforce in most cases, nor do they have the financial knowledge or the energy to seek out profitable investments for life savings in other areas like the stock market or property. They depend on the returns from these savings, which they have diligently accumulated over a lifetime of service, and they do not deserve to be burdened with the obligation to help balance the state’s fiscal account.

Already this economy affords negligible opportunities for secure investments, and now those who need these instruments the most are finding out that they will have their monthly cheque reduced by another 10pc. At the moment, there is some confusion about whether the tax will be deducted at source, or whether beneficiaries will be asked to pay at the time of filing their returns. If the latter is the case, it will serve as a disincentive to file for pensioners. If it is the former, it will be a compounded injustice. These specific investments have always been exempted from income tax, for obvious reasons, although they are legally required to be declared as income when filing tax returns. If the government follows through on the SRO issued by the FBR on Sept 29, requiring a 10pc tax on these incomes, the least it can do is make a clear announcement to the effect to help dispel some of the anxiety that is permeating the community of retirees and widows who rely on these instruments. The fiscal difficulties of the state are real, and new revenue measures are inevitable in order to help bridge the deficit. But every effort should be made to ensure that the weak and vulnerable segments of society are protected from this inevitability.

Published in Dawn, October 17th, 2017