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Now, something new: Tax on old clothing

July 15, 2013

FOR the cynics accusing the young government of trying a series of second-hand remedies, this is truly an ingenious move. And this time the government has begun where everyone wants it to, at the grass roots. The federal government has lent greater respectability to the merchandise by levying a five per cent tax on the import and local supply of worn clothing. This clearly betrays vision. The government has the ability to tap new areas to increase revenues. The silver lining for the people here is that a government which is aware of the deals at the stalls in the old clothes lunda bazaars might one day end up looking deeper into the lives of the always pitied low-income groups.

As usual, this five per cent tax is accompanied by statistics. The import of 354,895 metric tonnes of worn clothing worth $137,315m in 11 months must be a sign of good business, which the Federal Board of Revenue has sought to cash in on through an order with immediate effect. The figures can be used to argue that the sales are actually falling. A decline of 4.3pc was recorded between July 2012 and May 2013 just as the value of these clothes rose by 0.84pc. This indicates increase in prices. The next time someone tries on a shirt at the stall down the street, he might have to haggle with the seller just a little more. Five per cent on pieces starting at Rs50 or even below, the government must be hoping, will be bearable. But while we might not see the traders’ appeals in the papers for withdrawal of the levy, the step does unclothe a strange official mentality in a country where many of the privileged remain untaxed.