ISLAMABAD (our reporter):- The Pakistan Stock Exchange (PSE) crashed after the announced tough decisions including the imposition of super tax on major industries by Prime Minister Shehbaz Sharif
The stock market plunged more than 2,000 points in the 100 Index or almost 5 percent on Friday after the announcement of tough decisions by the premier.
There was a mixed trend at the start of business on Friday. After the government imposed a 10 percent super tax on major industries, selling pressure on shares increased and the stock market continued its downward trend.
The index fell from more than 42,000 points to 40,663 during first session. 10% super tax on large-scale industries is on the higher side and the market didn’t expect this, therefore the reaction is intense by the market.
The stock market lost more than 2,000 points at the end of the first trading session on Friday.
Analysts believe that the government had announced a 10 percent tax on major industries, including cement, steel, sugar, oil and gas, fertilizers, banking, auto and tobacco. The stock market turned negative and this led to a sharp downturn in the stock market.
Reacting to the PM Shehbaz’s address, former energy minister Hammad Azhar said that the “super tax will be priced in their balance sheets and passed on to consumers” in many ways.
He said that while the country’s industry is already hit by price hikes, the public will now be more affected faction.
“Industry is already facing crippling costs due to rising prices of commodities and energy. This super tax will be priced in their balance sheets and passed on to the customers in many cases. Means even higher prices for the public,” Azhar wrote.
“Super tax will end up further squeezing the formal sector of the economy. This means taxing the already taxed even more. The economy is nosediving and such a measure at this time will reverse the industrialisation momentum that PTI generated,” he added.
Pakistan business council has also reacted on the imposition of super tax and said that 10% super tax on industry already carrying disproportionate burden when agriculture and trade contribute little and investment level is low is retrogressive.
What makes it worse is that it is retrospective, it said in the statement through twitter.
How is taxing the already taxed going to encourage more to join the tax base? Why would manufacturing grow when commercial importers enjoy full and final tax on under invoiced goods? How will we balance the Current Account?, asked the council.