DPI statement on VAT insults the people’s intelligence

Dear Editor,

I am not sure whether Mr Imran Khan, Director of Public Information, is numerate or is trying to mislead the nation. But his release as Director of Public Information about the value of the tax measures being pumped into the economy insults the people’s intelligence.

According to Mr Khan, the reduction of the VAT rate by 2% will cost the Treasury $4,817 million. Taking that away from the 2016 collections of $35,968 million leaves $31,472 million. Has he read the 2017 Estimates? They show VAT collections for 2017 at $45,180 million. That means that the additional revenue from previously non-VAT items including basic food items, drugs, education, water and electricity, will be $13,708 million on the revised 2016 base. That is a 44% increase, or does he not realise it?

Does Mr Khan understand that VAT is a regressive tax which is borne by consumers and which falls hardest on the poor? Does he understand too that the new personal income tax threshold is also regressive and therefore favours the better off?

Yours faithfully, Christopher Ram