The government has proposed a 3% advance tax on business and club class air passengers in a bid to widen the tax net but the move will undermine a recent effort of Pakistan International Airlines (PIA) to tap this market.
Federal Finance Minister Ishaq Dar said passengers travelling through the economy class are exempted to ensure working class people and students travelling abroad are not burdened.
The 3% advance tax would be applicable on passengers who are filing income tax returns. All those business and club seat passengers who fail to file returns would have to pay 6% advance tax.
A senior official of the Civil Aviation Authority (CAA) said that the advance tax will not add any substantial amount to government revenues. “The number of passengers who buy business class ticket is negligible at best.”
Nothing for PIA
While Federal Minister Ishaq Dar did mention the privatisation program in the budget, he did not mention either PIA or Pakistan Steel Mills – the two organisations in desperate need of financial restructuring.