Islamabad, July 5, 2023 – In a move that may impact the economy and burden the masses, Pakistan has decided to retain the higher rate of general sales tax at 18 percent for the fiscal year starting July 1, 2023, and continuing onwards. The decision was announced by the Federal Board of Revenue (FBR) sources today.
The increase in the general sales tax rate from 17 percent to 18 percent was initially implemented through the Finance (Supplementary) Act, 2023 in February of this year. At the time, it was believed that the increase was a temporary measure aimed at generating significant revenue for the government. However, the decision to maintain the higher rate has raised concerns about its impact on the general public, particularly the economically disadvantaged.
Critics argue that the higher sales tax rate places an additional burden on the already struggling masses of the country. Sales tax, also known as a consumption tax, is typically kept at lower rates worldwide to provide relief to citizens. However, the decision to retain the higher rate in Pakistan may lead to increased inflation and reduced purchasing power during the current fiscal year.
The impact of this decision is expected to be felt across various sectors of the economy. Higher sales tax rates can lead to increased prices of goods and services, making them less affordable for consumers. This, in turn, may result in a decline in consumer spending and a slowdown in economic growth.
The government’s decision to maintain the 18 percent sales tax rate may have been driven by the need to boost revenue collection. However, concerns remain regarding its long-term effects on the economy and the welfare of the people. It is hoped that the government will consider the potential consequences of this decision and take necessary steps to alleviate the burden on the public while ensuring sustainable economic growth.
As the new fiscal year begins, businesses and consumers in Pakistan will closely monitor the impact of the higher sales tax rate on their daily lives and the overall economy.