The Lahore High Court’s (LHC) decision to suspend the 10 percent super tax on large-scale industries imposed just a few months ago in June is a serious blow to the government’s efforts of generating an additional Rs.80 billion in tax revenue. The matter came down to a technicality regarding the timeline of the closure of accounts, reflecting the poor standard of policymaking in the country. Surely there must be more thought that goes into policy-making, especially at a time when the country is nearing economic collapse and requires solid and reliable revenue streams.

The super tax was imposed with the intention of providing relief to the common citizen by taxing large-scale industries like cement, iron, steel, sugar, oil, gas, fertiliser, LNG, textile, automobiles, cigarettes, beverages, chemicals, airlines and banks. The policy was supposed to bring in Rs.80 billion on an annual basis and was applicable to all companies within these respective industries. As good as this sounded then, things seem to be going in a different direction as major companies filed petitions against the tax, stating that their accounts had already closed in December. This means that the tax should not be applicable to them as retrospective legislation cannot disturb past transactions.

The LHC’s decision to provide relief to these companies through suspending the super tax exposes not only the government’s inability to pass effective legislation but concerns regarding what alternative revenue streams are available to fulfill the requirement of Rs.45 billion needed now. This was a flaw that should have been caught and rectified before, giving the government a fair chance to impose taxes without several loopholes that could have been used to avoid taxes. Now, reassurances about how sufficient income can still be generated by the government must be given. It is vital that we learn from our mistakes.