ISLAMABAD, August 12(ABC): In a major policy statement, Federal Finance Minister Miftah Ismail on Friday said that all businesses owned by the country’s powerful military are taxed as he suggested that the government plans to change the way how small traders are taxed.
In a set of messages posted on microblogging social media network Twitter on Friday evening, Miftah responded to questions on taxation of small traders, real estate being used as parking lots for copious amounts of financial capital and exemptions given to businesses owned by the army.
In response, the federal finance minister clarified that businesses owned by the country’s military do pay taxes.
“All Army-owned businesses are taxes (sic).”
Miftah even went a step further and said that these businesses are taxed at the same rate as some organizations which are either fully or semi-owned by the government and the private sector.
“For instance, Askari Bank pays tax at the same rate as National Bank of Pakistan (NBP) or Habib Bank Limited (HBL).”
“Similarly Fauji Fertilizer pays tax at the same rate as Engro or Fatima Fertilizer.”
Tax for small traders
On taxing small traders, the finance minister clarified that they are indeed taxed.
“The fixed tax from small traders will be removed,” he said.
Miftah also confessed to making mistakes in the tax structure which require corrective changes.
“We will now be collecting taxes on an ad valorem (according to value) basis and collect Rs27 billion compared to only Rs6 billion last year. So a 350% increase.”
Parking lot for funds
With many Pakistanis preferring to lock away their wealth in easy dividend items such as real estate and gold, the finance minister conceded that these are “stores of value for Pakistanis”.
He added that they are used by the “mostly under-taxed”.
The practice, however, means that these are not-so-productive uses of fiscal capital.
The finance minister explained that this system is in vogue due to the way official prices of real estate are determined.