‘StatusTax’ imposed for the Business Class travellers

The international travelers from Pakistan will have to pay an additional tax from now on as the Federal Board of Revenue (FBR) has imposed advanced tax on International air tickets of business class.

Tax of Rs 16000 has been imposed on first and executive class tickets while tax of Rs 12000 for other tickets except for economy class.Buyers of international economy class tickets can take a sigh of relief for now as the economy class ticket is exempted from the tax.

This imposition has come under Income Tax Ordinance 2001. This tax will be charged on both one-way and round trip (return) tickets and the tax can be paid electronically or manually.

Some would be against the decision but if a person can afford a business class foreign trip then it may be assumed that this tax won’t bother him/her much. For those who do not want to pay an extra amount as a tax (usually those who travel for study purposes), the advice is to travel with economy class ticket.

businessclass1

David Friedman an academic economist explains why people fly in business class in the following passage :

“Perhaps the explanation is the value of status. Passengers paying a business class fare are buying the feeling that they are Very Important People.Organizations that pay a speaker’s fare are demonstrating that they consider him a Very Important Person, and the fact that their speakers are Very Important People makes them Very Important Organizations.”

Being taxed for enjoying a certain status is acceptible for most economists and policy analysts. The Pakistani Policy and Budget control analysts have been making serious ammendements in airfare and tax since 2011.

Some previous reccomendations have been as follows:

1)Rs. 2500 tax will be imposed on flying within the premises of Punjab province and traveling up to 500 kilometers.
2)Rs. 1500 will be imposed on traveling less than 500 km.
3)Rs. 5000 tax will be imposed on the Economy and Economy Plus classes of international flights while Business class and First class tickets will be taxed by Rs. 10,000.
4)Diplomats and the Hajj, Umra aspirants will not be taxed while 16% tax will be imposed on chartered flights.

While Pakistan struggles to maintain a discplined taxed environment,FBR continues to find new ways of collecting “direct income tax”. In its struggle to develop a more fair system FBR continues to tax incomes and bills of the rich people in Pakistan.


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