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Cooperative Tax plus Super Tax: Hyper Inflation and Common Man

 

Cooperative tax is imposed on the net income of companies (private and public). Government imposes taxes to collect revenue. But high tax rates cause Hyperinflation. There are many disadvantages of high rate cooperative tax, discussed blew

Cooperative Tax and Pakistan

Cooperative tax is a threat to Pakistan's economy in the present situation. A study shows that a 1 % increase in tax will cause a 0.433 % decrease in GDP. 10% super tax imposed on banks, sugar, automobiles, oil, cigarettes, gas, beverages, cement, chemicals, steel, textile, fertilizers, terminals, airlines, and LPG.

Cooperate tax and other countries

Cooperate tax has reached a high level of 39% after the increment of super tax of 10%. After the non-deductibles, the tax on adjusted profit means that the ratio between the income of owners and the government will be 55:45. This rate is the highest rate in all free countries all over the world. The countries who want to capture foreign direct investment, always keep low Cooperate tax like Uzbekistan and Tajikistan keep this at the level of 7.5% and 8 % respectfully while India imposed 25%.

cooperative tax: hyper inflation and common man

Cooperate tax effects on FDI and stock exchange

Cooperate tax may affect the profit of the owner of the company, labor, and the consumer negatively. With the increase in inputs price of petrol, diesel, and electricity the increase in Cooperate tax has a great impact on Stock Exchange. The stock exchange suffers because of the decrease in the per-share profit ratio.30 thousand per ton tax imposed on LPG. In the budget, 440 billion rupees were decided to collect by the government but now doubled to 905 billion. So it is clear that the people have to face the condition like fish out of water after these taxes.

Effect on the common man

 The tax is also imposed on low-income citizens of Pakistan as well as high-income people as the petrol price is increasing day by day and it assumes that it will be above 290 rupees.  This tax decreases the real income of the labor class so the labor class is much affected by this due to inflation and low purchasing power .

In nutshell blew are the side effects of high cooperative tax,

  1. This tax is also a hurdle for captivating Foreign direct investment, because when investors examine that taxes are high so they withdraw their money from Pakistan and invest in low-tax countries.
  2. The stock exchange has fallen from 2000 points in one month.
  3. The dream of prosperity by privatization has broken and the results are very alarming. All big institutions of Pakistan are on sale just to collect money to meet government expenditures and facilities, not for the welfare of the common man.
  4. Big crocodiles will eat the properties and assets of the poor and middle class due to the abnormal taxes and inflation,
  5. The concentration of power and unequal distribution of wealth will increase.
  6. The export will decrease due to the increase in the cost of production. Import bills will be high due to the devaluation of the rupee.
  7. Gross Domestic Production will fall as taxes will rise.
  8. Unemployment will increase, due to the low investment.
  9. What do you think about the solution to this alarming situation in Pakistan? In my opinion investment in productive industries and in the public sector may solve this issue.
  10. Hyperinflation is present in Pakistan.
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