Business

Stock Exchange after PM Shehbaz announces 10% ‘super tax’ on industries

Stock Exchange after PM Shehbaz announces 10% ‘super tax’ on industries

Minutes after Prime Minister Shehbaz Sharif proposed a 10% tax on large-scale enterprises on Friday, the Pakistan Stock Exchange (PSX) plummeted.

Up until two hours after the opening bell, the stock market remained flat. However, around 11:40 am, the market experienced a sharp decline, with the KSE-100 dropping to 41,100 after losing 1,598 points. The benchmark KSE-100 index was down 2,053 points, or 4.8 percent, as of 12 o’clock.

According to the PSX Rulebook, trade in all securities is suspended for a predetermined amount of time if the index moves 5% above or below its most recent close and remains there for five minutes.

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Raza Jafri, the head of stocks at Intermarket Securities, attributed the decline to “huge taxes.” He told Dawn.com that the “market has responded very strongly since it will substantially impact company profits.”

The Arif Habib Corporation’s Ahsan Mehanti agreed. After the PM declared a 10 percent super tax on industrials for a year to close the fiscal deficit, he claimed that PSX “saw significant pressure across the board.”

Alpha Beta Core CEO Khurram Shehzad stated that the investor tax and corporate income tax will now be higher than 50 and 55 percent, respectively, as a result of the government’s most recent initiatives.

“Not only in this area, but also throughout Pakistan’s history, this is the highest. It is among the highest tax rates in the world, in reality “He emphasised.

PM announces ‘super tax’

A “super tax” on major businesses such as cement, steel, sugar, oil and gas, fertilisers, LNG terminals, textile, banking, automobile, chemicals, drinks, and cigarettes was announced earlier today after the prime minister gave the country assurances about budget decisions.

A “poverty alleviation tax” will also apply to high net worth persons. Over Rs150 million in annual income will result in a 1 percent tax; Rs200 million will result in a 2 percent tax; Rs250 million will result in a 3 percent tax; and Rs300 million will result in a 4 percent tax.

The decision, according to the prime minister, was made in order to shield the poorer regions of the nation from rising inflation. “Now is the moment for the wealthy citizens to contribute. They now have a chance to demonstrate altruism. And I have no doubt that they will play their part and contribute fully.”

He said that organisations tasked with collecting taxes ought to take from the wealthy and give to the less fortunate. But he bemoaned the fact that the “big ones” avoid paying taxes.

PM Shehbaz emphasised that it was the duty of the entire state, including the PM, to ensure that taxes were paid to the national treasury. He continued, “So far, we have failed in this.”

It’s never too late, he said. Teams have been organised to launch a full-scale effort to collect taxes as soon as the budget [is] authorised. All constitutional institutions will be contacted for assistance, and we will use contemporary technology and digital instruments [to that end].

RELATED: Pakistan reaches ‘Broad agreement’ with IMF to end uncertainty

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Sibtain Ali is a Senior Editor Business at Pakistan Lounge and joined in October 2021. Formerly business editor at a renowned International News website

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