Muhammad Mudassar

In order to comply with the IMF conditionalities and to reduce the burden of subsidies on the national exchequer, the government has significantly increased the electricity tariffs, reports WealthPK.

According to the newly approved electricity tariffs, a small shopkeeper who was issued a Rs3,725 bill for consuming 111 units in July 2022 was charged Rs11,667 for consuming 81 units in August.

A retail tax of Rs6,000 was also added to the retail prices, but the decision was reversed after a strong protest from commercial consumers. However, after deducting Rs6,000, the consumer has to pay Rs5,667, which still is a very large amount given the number of units consumed.

The government recently decided to provide relief to the consumers using fewer than 200 units a month by waiving fuel charge adjustment (FCA). The initiative is split into two parts. First of all, the consumers who consume less than 200 units of power a month will be exempted from paying FCA for July and August bills.

According to the energy ministry, 17 million people would benefit from this measure. As a result of this relief, the government is providing Rs22 billion in assistance. The rising energy product prices have led to an increase in the prices of all commodities.

Talking to WealthPK, Muhammad Faisal, a resident of Rawalpindi, said the FCA waiver was not enough to combat the current inflation. He said Pakistan is currently experiencing one of the highest inflation rates in history and suggested that it should provide relief in the other sectors too.

Muhammad Umar Farooq, a small textile businessman, told WealthPK that the industries were already suffering due to the hike in petroleum prices and the imposition of fixed tax will add to the woes of the retailers, as the government is already collecting GST from them. The commercial sector is already paying hefty taxes in the shape of electricity duty, GST, income tax, extra tax, and further tax.

‘’This hefty tax will result in closure of many businesses, which will have a negative effect on employment. There should be a reduction in extra taxes levied by the government. Already due to a significant hike in inflation, the purchasing power of people has decreased,” he added.

Another shopkeeper, Muhammad Asad told WealthPK that rent and electricity bills are two major input costs. He said the hike in power price would prove detrimental to small businessmen due to the high cost of doing business and would also open up yet another floodgate of inflation because in addition to making the power costlier and unaffordable for consumers, the exorbitant hike in the base tariff would cause an increase in the prices of all essential household goods.

Since electricity is a major component of doing business, the business community strongly pleads against adding an otherwise avoidable burden of costlier electricity which is going to terribly affect the industrial activities, create problems for the public, and plunge the economy into more crises.

Small businesses are the backbone of the economy and the government should facilitate them in creating job opportunities at the local level. The government should increase the targeted subsidies on the other sectors too because the relief in FCA is not enough to cope with the inflation.

Credit : Independent News Pakistan-WealthPk