Feisal H. Naqvi

In a typical domestic bill, government adds 24% taxes to the electricity bill. It adds 37% taxes to commercial bills and 27% taxes to industrial bills. Here is a way to immediately reduce electricity bills substantially for all consumers. The government imposes these four taxes on electricity bills: Extra tax, Further tax, Sales tax (18%), and Advance Income tax (7.5% for domestic, 12% for commercial and 5% for industrial consumers). Total collection last year was Rs 388 bn and will be Rs 450 bn this year. And provinces then levy “electricity duty”on top of these bills. The provincial and federal governments should immediately remove all taxes on electricity bills at least from July to October. In fact these should be removed all year. Doing so for the entire year will decrease Rs 450 billion in tax revenues, which will mean Rs 265 bn less going to the provinces (they have more than enough money) and Rs 185 billion less going to the federal government. Therefore the federal government should reduce PSDP expenditures by Rs 185. This will keep primary surplus and total deficit numbers the same and there will be no issue with the IMF. Last year the government spend Rs 705 bn on PSDP. In this year, where the government was asking for people to sacrifice and has chosen to tax salaried class and professionals to the hilt, it decided to raise PSDP to Rs 1400 bn. (Talk about skewed priorities). Now the PSDP has been reduced to Rs 1150 bn. If the government is willing to bring PSDP to Rs 965 bn (still an increase of 38% over last year!) then all taxes for all consumers can be eliminated. When people are killing their family members due to electricity bills, when children are going to bed hungry, what is the government waiting for? I have given an easy, fiscally responsible way to substantially reduce bills and even increase excess power consumption. It would be a shame if the government doesn’t act of it.