What are the advantages and disadvantages of RGST?

Answer 1

Advantages of RGST

§ The imposition of RGST was not the demand of International Monetary Fund (IMF), but it was the need of the country, and added that subsidy on electricity, wheat flour and other items had been withdrawn.

§ Expansion in tax net was indispensable to bolster the economy and run other financial affairs of the country.

§ A sum of Rs160 billion was required to rehabilitate the flood victims and if RGST was not imposed then how could this amount be raised?

Disadvantages of RGST

§ Reforms General Sales Tax (RGST) is aimed at economic self-reliance to a journey towards welfare society. GST is already imposed on around 5,000 items ranging between 17-25 percent and in reformed shape this rate would be universalized at 15 percent.

§ RGST would boost inflation to the disadvantage of common man. The prices of only around 400 out of around 5,000 items might see upward trends while in the case of rest they would come down.

§ No tax was being imposed on essential daily use food items which nullify the claim that common man would be burdened in the changed scenario.

§ Documentation of economy was a key to progress and prosperity of country and RGST was a step forward in this direction.