KARACHI, June 5: Instead of checking banks against profiteering at the cost of depositors, the government has decided to extract more from the public. State Minister for Finance Omar Ayub Khan announced in his budget speech that the tax on withdrawal of money from banks has been doubled.

He said that the withdrawal of Rs25,000 or more was subjected to tax at 0.1 per cent and now it had been increased to 0.2 per cent.

The tax will directly affect the depositors already getting negative return from banks. Banks have been doing booming business for last couple of years. Last year the listed banks earned 99 per cent profit.

However, the banks kept most of the profit with them as is obvious from the high banking-spread. The banking spread emerged as a serious issue which involved even President Pervez Musharraf who stressed the banks to pay more to the depositors.

No detail was provided in the budget speech by the minister that how much the government earned from tax on bank withdrawals up to Rs25,000 and above. The average return to the depositors is about 4 per cent which is much lower than the prevailing inflation, now slipped to 6.9 per cent.

Bankers were not ready to comment on the subject saying that they were not aware of the details, but, however, said that the banking business would not be affected. The depositors, however, were expecting that the government would persuade the State Bank for higher yield on their deposits. The State Bank has already said that the issue would not be taken up on the policy level.

“This is surprising that the government wants to get more from the depositors while the tax on banking sector is being reduced each year,” said Aftab Alam, a small trader.