The Pakistan Stock Exchange (PSX) plummeted shortly after Prime Minister Shehbaz Sharif imposed a 10% levy on large-scale enterprises on Friday.
The bourse remained unchanged for two hours following the opening bell. However, the market had a sharp decline at 11:40 a.m., with the KSE-100 dropping 1,598 points and falling to 41,100. At noon, the benchmark KSE-100 index fell 2,053 points or 4.8 percent.
According to the PSX Rulebook, if the index moves 5% above or below its previous close and remains there for five minutes, trading in all securities is halted for a predetermined period.
The benchmark index ended the day at 41,149.16 points, a decrease of 1,567.81 points (or 3.6%)
Raza Jafri, the head of stocks at Intermarket Securities, cited “huge taxes” as the explanation for the decline. He told that “The market has responded negatively because it will significantly impact company profitability.”
The Arif Habib Corporation’s Ahsan Mehanti concurred. “The PSX experienced huge pressure across the board when PM Shehbaz proposed a 10 percent super tax on industries for one year to close the budget deficit gap,” he said.
According to Khurram Shehzad, CEO of Alpha Beta Core, the corporate income tax and investment tax will now exceed 50 percent and 55 percent, respectively, as a result of the government’s latest actions.
This is not just the highest in this region, but the entire history of Pakistan. It is, in fact, one of the highest tax rates in the world,” he noted.
PM declares ‘super tax’
The prime minister declared a “super tax” on large-scale sectors, including cement, steel, sugar, oil and gas, fertilizers, LNG terminals, textile, banking, automobile, chemicals, drinks, and cigarettes, earlier today.
Individuals with a high net worth will also be subject to a “poverty alleviation tax.” Those whose yearly income surpasses Rs150 million are liable to a 1 percent tax, Rs200 million to a 2 percent tax, Rs250 million to a 3 percent tax, and Rs300 million to a 4 percent tax on their income.
The prime minister stated that the decision was made to protect the country’s underprivileged from growing inflation. “It is now time for wealthy citizens to do their part. It is their chance to demonstrate altruism. And I am convinced that they will play their part to the fullest.”
He stated that tax collection authorities should take from the wealthy and give to the poor. He regretted, though, that the “big ones” avoid paying tax.
PM Shehbaz emphasized that it was the obligation of the state as a whole, including himself, to ensure that tax revenues were deposited in the national treasury. “We have thus far been ineffective,” he added.
It is never too late, he remarked. Immediately following the passage of the budget, teams have been formed to aggressively collect taxes. We shall seek assistance from all constitutional institutions and deploy cutting-edge technology and digital technologies [for this goal].
