We saw an unprecedented panic selling frenzy in the Pakistan Stock Exchange during the trading week that ended on 2nd June 2017 when the market lost 4,000 points and the value worth Rs. 650 billion.
This stock market blood bath took place during the week following announcement of budget 2017-18 by Mr. Ishaq Dar, who is generally known as moderate and market friendly finance minister. The stock market was expecting some positive news from the budget such a removal of tax on bonus share but on the contrary the finance minister shocked the market by enhancing the tax on dividend income and capital gain in the budget 2017-18.
The enhanced taxes on dividend income and capital gain would bring Rs. around 7 billions to national kitty from stock market in the financial year 2017-18 but the market cap worth 650 billion is wiped out just in a week, due mainly to these unexpected enhanced taxes on stock market. Small investors’ nest eggs and hard earned saving invested in the stock market has been burned in this carnage.
PML (N) government has been claiming that stock market surge during last four years is due to their good economic policies . So why PML (N ) is destroying the gains achieved in stock market by imposing unnecessary taxes on stock market? I think the finance minister has been ill advised in regarding matter. The enhanced taxes on stock market have scared away foreign investors who were expected to invest around $ 300 to 400 million in Pakistan stock market starting from 1st June 2017 when the Index was upgraded to in the MSCI emerging market index.
The enhanced withholding tax on dividend income is absolutely inappropriate because it means taking out money from the pockets of a good number of small investors who reportedly after reduction of interest on national saving centres, have diverted their savings to stock market hoping to get a better return in form of dividend on their shareholdings . I would to suggest the respectable finance minister, Mr. Ishaq Dar that he should review and withdraw enhanced taxes on stock market, imposed in budget 2017-18 in order to save stock market from unnecessary shocks, so that stock market stays on a steady course and keep progressing. I believe Pakistan’s economic fundamentals are good and its stock market has yet to realise it’s rightful place in the world.
EJAZ AHMAD MAGOON,
Lahore, June 6
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