Proposed 17% sales tax on number of items to further fuel inflation rate

sales tax

Supplementary Finance 2021 has been presented in the National Assembly by the Federal Minister of Finance on Thursday. In the bill, the sales tax exemptions worth Rs 343 billion have been withdrawn on machinery, pharmaceutical products, and imported items.

While presenting the budget, the finance minister said, “Elites, not the common man are beneficiaries of these exemptions. Tax exemptions of Rs 343 billion had been benefiting various interest groups for the past 70 years. We have targeted only those items which are used by the elites. We have increased the cost of imported luxury items.”

He explained that the imposition of 17 percent sales tax on some items would raise Rs 2 billion and the imposition of tax only for these specific items would affect the common man. He cleared that the withdrawal of tax exemption tax worth Rs 112 billion on machinery and Rs 160 billion on pharmaceutical items are adjustable and refundable.

Read more: Govt to impose 17% GST on 140 goods in the mini budget

The items on which sales tax exemptions have been withdrawn include animals, steak meat, fish, and vegetables, high-end bakery items, branded cheese, imported sausages, high-end cellphones, and imported bicycles.

The 17 percent sales imposed on items for which the government is of the view will affect the common man include a personal computer, sewing machines, math boxes, iodized salt, red chill, and contraceptives.

The items on which the tax exemptions have been retained include import and local supply of rice, wheat and local supply of other grains, local supply of fruits, vegetables, beef, mutton, poultry, fish, eggs, sugarcane, and beet sugar.

The zero-rating on milk and fat-filled milk has also been retained. The tax on fruits and vegetables, imported from Afghanistan will remain exempted. Moreover, the tax on Education textbooks, stationery items, and locally produced laptops and personal computers will remain exempted.

While talking to the media after the budget, the Finance Minister said that those creating fuss on this budget and the on the issue of State Bank’s autonomy are doing nothing but to politicize the issues without any rationale.

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