Economic: The much awaited RGST and masses

The local media generated enough hype among masses regarding reformed general sales tax (RGST) though still some of them are unclear about what impacts could this RGST have on their lives. Well, from the government's point of view its obviously an earner but do masses agree to this obviously 'NOT' as they think there are many other ways to generate or save income and what the funniest thing is, they are showing resilience without even knowing what this is all about. 


So, do RGST will have an impact on public? well the government officials keep saying that it will not affect the public as the rates are being reduced through this new legislation but none of them have told the public that they are increasing the items in the GST basket. So, you might be paying lesser GST on one of the product you purchased last month but you might also be paying GST on products which were exempted under previous legislations. In particular the proposed system will:

(i) reduce standard sales tax rate to 15% and increase exemption threshold to Rs 7.5 million;

(ii) curtail exemptions mostly basic food items, charities and international/sovereign commitments;

(iii) provide no general zero-rating facility to local consumption;

(iv) promote documentation of the national economy and broaden the base of consumption/expenditure taxation in the country;

(v) modernize the value added tax system of the country by adopting international best concepts and practices of indirect taxation;

(vi) facilitate the cash flow of businesses through centralized/electronic expeditious refund payment system; and

(vii) provide for appropriate provisions to collect and administer Provincial sales tax on services in integrated manner along with Federal sales tax as and when authorized by the provinces. 


Though, it appears that this will bring advancements to our tax system but the point is, do we really need all this at stage when, GDP of the country is at the lowest in the region, indirect i.e. consumer taxes are almost double of direct taxes, Interest rates are at all time high and above all a rising inflation trend for last couple of years. 


Think carefully and act accordingly ...