Additional taxes won’t result in rise in inflation, claims Tarin
Stay tunned with 24 News HD Android App
Refusing to acknowledge the inflation tsunami that may come in wake of the mini budget, Minister for Finance and Revenue Shaukat Tarin Thursday said the government has proposed only Rs 2 billion tax exemptions on the items that can be related to the common man which would have a very negligible impact on inflation.
Addressing a press conference after presenting the supplementary finance bill in the parliament he said the government had proposed to withdraw tax exemptions of Rs343 billion out of which Rs272 billion taxes were refundable or adjustable, while the actual new taxes were only Rs71 billion out of which Rs69 billion taxes were about luxury items.
The minister was flanked by Minister of State for Information and Broadcasting Farrukh Habib and Chairman Federal Board of Revenue Dr Muhammad Ashfaq.
The minister said the Rs112 billion tax exemptions on machinery, and Rs160 billion tax exemptions on pharma sector would totally be refundable or adjustable.
He said the International Monetary Fund (IMF) had asked us to impose Rs700 billion new taxes but “We defended not to impose taxes on a number of food and other essential items and brought it down to Rs 343 billion”.
He said in the past unjustified taxes were exempted on various items that were being withdrawn.
He said criticism regarding the government imposing additional burden on the people and of a consequent rise in inflation is “baseless.”
He said that an Rs70 billion rebate included taxes on luxury and business items including imported fish, high-end bakery items, expensive cheese and imported bicycles.
Tax exemptions worth Rs2 billion will be removed from items of general use like personal computers, sewing machines, matchboxes, iodised salt, red chillies, and contraceptives.
“If we expect inflation to increase because of the imposition of tax on these items then they (the Opposition) are mistaken,” he said, adding that this is the “crux of the supplementary finance bill.”
“The Opposition has been spreading rumours regarding an increase in inflation because of the finance bill,” the finance minister said.
Tarin said that no sales tax will be imposed on fertiliser, imported second-hand clothes and cinema equipment. “The agreement with the IMF is not just a matter of $1billion,” Tarin said.
The finance minister went on to say that PTI’s manifesto says that institutions should be given autonomy, as “they cannot be strong until they are given autonomy”.
Speaking about the State Bank of Pakistan (Amendment) Bill, 2021, he said that the previous regimes kept "interfering" in the matters of the central bank.
“The Board of Governors (BoG) of SBP will be appointed on the recommendations of the government,” he said, adding that it was earlier thought the BoG will be appointed by the bank itself.
Tarin clarified, however, that it was made clear to them that this wouldn't be possible.
"How can they make their own appointments?" he remarked. “No amendment has been made in the bill regarding the appointment of SBP's board of directors,” he added.
Tarin underlined that central banks of all developed countries have autonomy.
Speaking about inflation, he said that Pakistan’s inflation based on the consumer price index (CPI) clocked in at 11.5% in November 2021.
“Inflation in the US and UK also surged to record highs, so if I have failed have Joe Biden and Boris Johnson also failed?” he asked.
The minister also asked that if prices of edible oil in the international market are increasing he should stop importing the essential commodity, or if the price of coal is rising the government should stop importing that as well.
Tarin assured the media that the prices of medicines will go down.