We saw an unprecedented panic induced 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 650 billion PKR.
This stock market blood bath took place following announcement of budget 2017-18. The stock market was expecting some positive news from the budget such a removal of tax on bonus share but it shocked the market by enhancing the tax on dividend income and capital gain in the budget 2017-18.
The enhanced taxes bring around 7 billion PKR to national kitty from stock market in the financial year 2017-18 but the market cap worth 650 billion is wiped out in just a week. Small investors’ nest eggs and hard earned saving invested in the stock market have resultantly been burned in this carnage.
The PML-N government claims that the stock market surge during last four years is due to their good economic policies. So why is the PML-N now destroying the gains achieved in stock market by imposing unnecessary taxes on stock market? 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 Index was upgraded to in the MSCI emerging market index.
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 suggest the respectable finance minister review and withdraw enhanced tax 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.
EJAZ AHMED MAGOON
Lahore
