The government on Sunday ordered an inquiry into the collection of sales tax at increased rates from retailers. Prime Minister Muhammad Shehbaz Sharif directed the investigation, focusing on the imposition of a higher sales tax ratio on small traders through electricity bills, which exceeded the agreed-upon rate.
During a meeting in Lahore, the Prime Minister immediately suspended the fixed sales tax collection via electricity bills and instructed officials to develop a new mechanism for this purpose. He emphasized the necessity of including representatives of the trading community in the consultation process before implementing any tax collection decisions affecting small traders through utility bills.
Shehbaz Sharif reaffirmed his government’s commitment to protecting the economic interests of the poorer segments of society. He directed the relevant authorities and ministries to devise an effective mechanism for reducing electricity rates for lower-income groups, addressing the financial burden on these households.
It is notable that the Finance Act, 2022, after thorough deliberations, introduced a fixed tax on retailers through electricity bills. The sales tax was added to the electricity bills for July 2022, with electricity supply companies applying the tax to all commercial connections, regardless of the service providers and suppliers of goods.
The inclusion of the sales tax in electricity bills sparked chaos, leading to significant agitation among commercial connection holders who protested against the government policy. The strong reaction from traders and retailers resulted in the suspension of the fixed tax scheme. In response, the government is now working on devising a new scheme to bring retailers into the tax net without causing undue distress.
The Prime Minister’s directives underscore the government’s intent to engage with stakeholders and ensure that tax policies are fair and sustainable. By including traders in the consultation process, the government aims to foster a collaborative approach, balancing revenue generation with the economic viability of small businesses.
The inquiry into the increased sales tax collection and the suspension of the fixed tax scheme represent proactive measures by the government to address the concerns of the business community and ensure equitable tax practices. The development of a new tax collection mechanism is expected to be a critical step in maintaining a balanced and inclusive economic policy framework.
In conclusion, the government’s decision to investigate and revise the sales tax collection method reflects its dedication to creating a fair and supportive business environment. By prioritizing the economic protection of vulnerable populations and engaging with stakeholders, the government is taking essential steps to promote economic stability and growth.