KARACHI: Finance Ministry spokesperson Muzzammil Aslam took exception to the term “mini-budget” for describing the Finance (Supplementary) Bill 2021, saying the legislative move is aimed at fixing the tax system instead of increasing revenue collection.
“Mini-budget is what every government presented every year from 2002 to 2018. They’d miss collection targets and then revise the tax rates through mini-budgets. But we’re already ahead of our collection target,” he said while addressing a press conference at the Karachi Press Club on Saturday.
Brushing away the concerns that the withdrawal of sales tax exemptions amounting to Rs343 billion will create inflation, Mr Aslam said. “Rich people have long been benefitting from these exemptions in the name of ordinary folk,” he added.
He repeated all the talking points from the speech of Finance Minister Shaukat Tarin in parliament on Dec 30. He insisted that no tax is being imposed on stationery items, laptops and small bakeries while defending the zero-rated status of packaged milk as only five per cent of the population consumes it.
Says no tax being imposed on stationery items, laptops, small bakeries
He said drug prices will actually decline after the imposition of adjustable sales tax. “You can hold us accountable if the medicine prices don’t come down,” he said. “We’re taxing it only to capture the entire pharmaceutical value chain,” he added.
As for the enhanced sales tax on imported cell phones, he said only a well-to-do person buys a mobile worth Rs35,000 or more — the rupee equivalent of the $200 value threshold.
He accepted that edible oil is getting expensive but added that its imports are in the private sector and depend entirely on international prices. He noted that the people belonging to the deserving segments of society were getting it at a 30pc discount at 700,000 provision stores through the Ehsaas programme.
With regard to the price of sugar, Mr Aslam said its per-kilo rate is down to Rs85-90 from the high of Rs150, although Sindh-based consumers are still getting it at Rs100 owing to the poor management by the provincial government.
Replying to a question, the spokesperson said the increase in the overall revenue collection was well-rounded and shouldn’t solely be attributed to import-related taxes. “Income tax collection has gone up 32pc against the target of 25pc,” he said while partly attributing the one-third jump in the direct tax to increased corporate profitability that may touch the Rs930bn mark for 2021.
As for the rising import bill, Mr Aslam said the country was importing $1bn-$1.25bn worth of machinery every month, which will increase exports going forward. “Up to 85pc of the recent increase in the import bill is because of the price effect while 15pc is due to the volumetric impact,” he said.
With regard to inflation that touched a 22-month high of 12.3pc in December, Mr Aslam listed all the countries where prices of daily items were on the rise. “Personally speaking, I was not in favour of reducing petroleum prices 15 days ago. But the prime minister wanted us to pass on the entire benefit of declining fuel prices in the international market to local consumers,” he said while justifying the latest hike of Rs4 per litre.
Published in Dawn, January 2nd, 2022