Investors witnessed a wave of never-seen-before panic and confusion when the PSX faced choppy start to trading. The stock market made a loss of around 4,000 points worth Rs650 billion. This is the effects of the enhanced tax introduced in the budget for the year 2017-18. Before the budget, the market was expecting some positive news, including the waiving of tax on bonus share, but the government shocked the market when it increased the rate of the tax on dividend income and income from capital gains. It is said that through this increment, the government will receive around Rs7 billion. It would have been fruitful for the government, had, after the announcement of the budget, the market cap worth Rs650 billion would not have been wiped out.
The PML-N government claims that the surge in the country’s stock market since the last four years is because of its good economic policies. Then why did the PML-N government increase the rate of tax? It is well known fact that an increase in tax would avert investors. The enhanced tax on dividend income has affected small investors the most. Most of the small investors are senior citizens and the retired people who are running towards the stock market since they don’t get adequate return on national savings certificates. The government must review the enhanced tax and withdraw the tax to attract more investors to the market.
Ejaz Ahmad Magoon