Prime Minister Shehbaz Sharif announced on Friday 10% poverty alleviation tax or super tax on large industries to relieve the general public of tax pressures.
“The collection from this tax will be used to alleviate poverty in Pakistan and it will be funded by high income class,” he said after a meeting with the government’s economic team.
The tax will be applicable on cement, steel, sugar, oil and gas, fertilser, LNG , textile, banks, automobile, beverages, chemicals and tobacco sectors.
According to the PM, the move will reduce the tax burden on the common man.
“We intend to tax high income earners so that entire nation can reap the benefit through education, health, infrastructure, skills education and IT uplift,” he said. “This is a cross subsidy and if we do not act immediately, then loan is the only option.”
He stressed that the initiative would lead to economic security and freedom and break the shackles of financial slavery. This is self-reliance, he said.
“Around 40% of tobacco manufacturing industry is informal and does not pay tax,” he said.
He added that tax amount worth Rs2 billion does not enter the national exchequer due to authorities’ negligence.
“We will make use of digital tools to end tax evasion,” he said.
Following this announcment, the KSE-100 index fell 2,053.35 points or 4.81% to 40,663.62 points before the market was suspended for Friday prayers.