MVT more than doubled in FY25
The statistics released by Pakistan Bureau of Statistics (PBS) shows that the motor vehicle tax increased by 169 percent and 127 percent in urban and rural areas, respectively.
In urban areas, water supply charges was up by 15 per cent, liquefied hydrocarbons by 14 per cent, house hold textiles 14 per cent and drugs and medicines by 13 per cent in 2014-15; whereas electricity charges showed a decline of 30 per cent, textbooks 7.8 per cent, and motor fuel a cut by 1.9 per cent.
In rural areas, the motor vehicle tax substantially increased by 127 per cent, dental services by 27 per cent, drugs and medicines by 15.3 per cent, recreation and culture by 13.2 per cent, doctor clinic fee by 12.8 per cent and education by 12.8 per cent. On the other hand, electricity charges were reduced by 30.2 per cent, textbooks by 11 per cent and motor fuels by 2.6 per cent.
It may be mentioned here that compared to CPI of 3.5 per cent, the non-food non-energy inflation despite showing decline, in urban areas was still on a higher side with 6.9 per cent and in rural areas it was even higher at 8.6 per cent in FY25.
The State Bank in its last Monetary Policy Statement acknowledged the fact that the core inflation (non food-non energy) declined marginally. In the statement it was further mentioned that the headline inflation increased to 3.5 per cent y/y in May from 0.3 per cent in April.
This reversal largely reflected the phasing out of the favourable base effect from food prices, along with persistence in core inflation. The central bank projected that some near-term volatility in inflation is expected, before it gradually inches up and stabilises within the 5–7 per cent target range and because of this it has kept the policy rate unchanged at 11 per cent. This outlook; however, remains subject to multiple risks emanating from potential supply-chain disruptions from regional geopolitical conflicts, volatility in oil and other commodity prices, and the timing and magnitude of domestic energy price adjustments.
Experts believe that the government's heavy reliance on indirect taxes does not allow substantial reduction in core inflation despite sharp decline in energy prices and stable exchange rate. Though the Federal Board of Revenue (FBR) has claimed that the share indirect taxes are around 60 per cent and 40 per cent of direct taxes, the experts are of view that indirect taxes account for 80 per cent of the revenue collection. They say contrary to FBR interpretation, withholding tax falls in the category of indirect taxes because the end-consumer eventually has to pay it.
Experts say in the ongoing fiscal year the government instead of broadening the tax net, further increased the indirect taxes which further burdened the common man and is likely to increase their cost of living.
Copyright Business Recorder, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
5 hours ago
- Business Recorder
PM Shehbaz pledges inclusive economic policy in meeting with top business leaders
Prime Minister Shehbaz Sharif on Tuesday met with leading industrialists and business figures to discuss Pakistan's economic outlook, export potential, and private sector challenges, reiterating the government's commitment to sustained economic growth and investor-friendly reforms. Welcoming the participants, the prime minister said economic stabilisation was the result of relentless efforts by his economic team, adding that the focus had now shifted towards long-term development, industrial expansion, job creation, and attracting foreign investment. 'We must now harness local resources to make Pakistan economically self-reliant,' he said, emphasizing regular consultation with business leaders to align policies with ground realities. The premier vowed to personally meet with representatives of the business community every month to incorporate their feedback into the policy-making process. 'I am hopeful our future engagements will be as meaningful and result-oriented as today's,' he added. Business-friendly policies infuse foreign investors' trust: PM The participants appreciated the government's efforts under the prime minister's leadership, especially in securing a deal with the International Monetary Fund (IMF) after a prolonged and challenging negotiation process. They termed the recently announced federal budget a 'people-friendly and pro-business' step and underlined the need for aligning policies with the demands of commerce, industry and foreign investors. They also called for expanding facilitation for exporters and investors to boost foreign direct investment (FDI). The business leaders praised the ongoing tax reforms and transparency in customs clearance systems at ports and welcomed the inclusion of private sector suggestions in the formulation of industrial development policies. Federal ministers Rana Tanveer Hussain, Muhammad Aurangzeb, Attaullah Tarar, Awais Leghari, Ali Pervaiz Malik, Shaza Fatima Khawaja, Hanif Abbasi, and Jand Anwar Chaudhry were present at the meeting. Prime Minister's Agriculture Coordinator Ahmad Umair, FBR Chairman and other senior officials also attended. Federal Budget: PM pledges more facilities for investors Briefing the participants, officials said the budget aimed to provide relief to the common man, businesses and investors while remaining within available resources. They noted Pakistan had ample potential for investment and industrial expansion, and efforts were underway to strengthen communication between the government and private sector. The business community was assured that cost-reduction measures, particularly lower power tariffs, were being accelerated to make Pakistani exports more competitive. FBR's ongoing digitization, they said, would further ease business operations and investment. Officials also highlighted progress on the privatisation of state-owned enterprises, the introduction of a modern IT ecosystem for the first time in the country's history, and the adoption of AI-driven systems in agriculture and other sectors. Consultations with the private sector, especially exporters, were being intensified to expand port operations and make Gwadar Port fully functional, they said. Prominent figures from the textile, agriculture, cement, and information technology sectors attended the meeting.
Business Recorder
18 hours ago
- Business Recorder
‘Appeal effect orders': tax experts decry FBR working
ISLAMABAD: Tax advisers have expressed serious concern over the Federal Board of Revenue (FBR)'s working while passing 'appeal effect orders' by its field formations or passing orders without considering replies of the taxpayers. According to a communication of Javed Iqbal Qazi, advocate Supreme Court and chairman Pakistan Tax Advisors Association to the Prime Minister, the FBR functionaries are not working in accordance with the law; neither appeal effect orders are being passed within the stipulated time nor replies submitted by the taxpayers or their counsels are being considered while passing orders; even when the reply is submitted through the IRIS system. He said: 'In a meeting of the Association, it was decided to bring to your attention the state of affairs of the country and role of different functionaries, vis-à-vis taxation. The replies filed are being ignored and subsequently repeated notices are being issued and finally the orders are being passed to create heavy demand against the taxpayer so as to achieve the arbitrary targets of collection; thus the taxpayer is being punished with heavy taxes.' He said there is no supervisory role of senior officers; i.e., additional commissioners, commissioners and chief commissioners as such the working condition of the department has deteriorated by this deliberate act of the FBR officers; this leading lack of confidence of the taxpayers and its counsels on the departmental officers. Copyright Business Recorder, 2025
Business Recorder
19 hours ago
- Business Recorder
MVT more than doubled in FY25
ISLAMABAD: In the outgoing financial year, the motor vehicle tax increased by more than 100 percent in both urban and rural areas. The statistics released by Pakistan Bureau of Statistics (PBS) shows that the motor vehicle tax increased by 169 percent and 127 percent in urban and rural areas, respectively. In urban areas, water supply charges was up by 15 per cent, liquefied hydrocarbons by 14 per cent, house hold textiles 14 per cent and drugs and medicines by 13 per cent in 2014-15; whereas electricity charges showed a decline of 30 per cent, textbooks 7.8 per cent, and motor fuel a cut by 1.9 per cent. In rural areas, the motor vehicle tax substantially increased by 127 per cent, dental services by 27 per cent, drugs and medicines by 15.3 per cent, recreation and culture by 13.2 per cent, doctor clinic fee by 12.8 per cent and education by 12.8 per cent. On the other hand, electricity charges were reduced by 30.2 per cent, textbooks by 11 per cent and motor fuels by 2.6 per cent. It may be mentioned here that compared to CPI of 3.5 per cent, the non-food non-energy inflation despite showing decline, in urban areas was still on a higher side with 6.9 per cent and in rural areas it was even higher at 8.6 per cent in FY25. The State Bank in its last Monetary Policy Statement acknowledged the fact that the core inflation (non food-non energy) declined marginally. In the statement it was further mentioned that the headline inflation increased to 3.5 per cent y/y in May from 0.3 per cent in April. This reversal largely reflected the phasing out of the favourable base effect from food prices, along with persistence in core inflation. The central bank projected that some near-term volatility in inflation is expected, before it gradually inches up and stabilises within the 5–7 per cent target range and because of this it has kept the policy rate unchanged at 11 per cent. This outlook; however, remains subject to multiple risks emanating from potential supply-chain disruptions from regional geopolitical conflicts, volatility in oil and other commodity prices, and the timing and magnitude of domestic energy price adjustments. Experts believe that the government's heavy reliance on indirect taxes does not allow substantial reduction in core inflation despite sharp decline in energy prices and stable exchange rate. Though the Federal Board of Revenue (FBR) has claimed that the share indirect taxes are around 60 per cent and 40 per cent of direct taxes, the experts are of view that indirect taxes account for 80 per cent of the revenue collection. They say contrary to FBR interpretation, withholding tax falls in the category of indirect taxes because the end-consumer eventually has to pay it. Experts say in the ongoing fiscal year the government instead of broadening the tax net, further increased the indirect taxes which further burdened the common man and is likely to increase their cost of living. Copyright Business Recorder, 2025
