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KARACHI: Renowned economist Ateeq Ur Rehman said that ninety to ninety five percent tax is collected through indirect tax, customs duty and withholding tax. Which appears to be enough to meet the revenue collection target of Rs 7.64 trillion, including additional revenue measures of Rs. 170 billion. Further the FBR issued the updated Sales Tax Act which revealed that the FBR has replaced the 17% sales tax with 18%. In addition, FBR has imposed a sales tax of 25% on import and local supply of luxury items, said Ateeq Ur Rahman (economic and financial analyst).
The introduction of 25% sales tax on import and local supply of luxury goods is a wonderful step to discourage luxury goods and encourage savings.
There must be a distinction between essential and non-essential items in the category of luxury goods. Breaking down the list, I think that confectionery, jams, jellies, cornflakes, cereals, pasta, ketchup and tomato sauces, fish and frozen / fresh meat are essential items and necessary to build local competition and maintain a balance between demand and supply . Considering that the only demand has been made to reduce the chargeable number of sales tax, this will help in checking the rising food inflation which already exists at 37% added ateeq.
The Government is requested to categorize minimum tax, encourage fixed tax and adjustable tax. Sales tax on anything and everything needs to be justified when forming withholding taxes, customs duties and indirect taxes.-SR