By ABDULLAH 
The Supreme Court of Pakistan has once again taken up petitions challenging the government’s controversial super tax, particularly its application to provident funds, sparking fresh debate over whether the levy is constitutional or an unfair burden on employees’ retirement savings.
A five-member constitutional bench, headed by Justice Aminuddin Khan, resumed hearings on Monday. The bench raised serious concerns about the legal framework of the tax and its long-term impact on ordinary citizens.
One of the central questions before the court was whether a provident fund a retirement benefit held in trust for employees could legally be subjected to additional taxation.
Justice Muhammad Ali Mazhar pointed out that provident funds are not the personal property of employers or employees but are trust funds protected under Section 53 of the Income Tax Ordinance, which provides explicit exemptions. He stressed that applying super tax to such funds may contradict legislative intent.
Justice Hasan Azhar Rizvi warned of the compounding effect of repeated deductions. “If 100 rupees are taxed today, in 25 years that amount could compound to 550 rupees. This means the retirement benefits of workers will shrink substantially,” he remarked.
The court also questioned the mechanism of collecting advance super tax when annual profits have not yet been finalized. Justice Mazhar asked how such a levy could be calculated without confirmed profit figures.
Representing the Federal Board of Revenue (FBR), Additional Attorney General argued that while exemptions exist, the government retains the right to impose extra levies during times of fiscal crisis. He maintained that super tax was designed to target high-income sectors such as cement, steel, banks, fertiliser, and textiles, rather than small businesses or individual workers.
However, counsel Asma Hamid, appearing for the petitioners, countered that provident funds enjoy statutory relief and cannot be taxed in this way. She emphasized that exemptions under the law are meant to protect workers’ long-term savings, and taxing them would directly undermine financial security for millions of employees.
Hamid also argued that recent contradictory rulings from different courts had confused taxpayers, with the Islamabad High Court (IHC) upholding super tax under Section 4C but reducing its rate, while other benches questioned its legality altogether.
The bench did not restrict itself to legal arguments but also pressed the government on policy flaws in the imposition of super tax. Justice Rizvi asked whether the government had consulted chambers of commerce, tax experts, or industry representatives before setting a blanket 10% levy.
FBR Member Dr Ishtiaq told the court that chambers and stakeholders were consulted, but the judges questioned whether any formal record or recommendations were submitted to Parliament. Justice Mazhar asked whether any documentation existed of these consultations, highlighting gaps in the process.
Justice Jamal Khan Mandokhail added that policies should not discourage taxpayers, warning that excessive taxation could drive people and businesses out of Pakistan altogether.
Although the government insists that super tax applies only to 15 high-earning sectors with annual incomes exceeding Rs300 million, the bench observed that the ultimate burden trickles down to ordinary citizens.
Justice Mazhar highlighted that whether it was cement prices or LNG shipments, additional costs eventually “come down on the common man.” He stressed that taxation policies must ensure fairness and avoid eroding public trust.
This concern resonates strongly with Pakistanis already struggling under record inflation, soaring utility bills, and declining purchasing power. Many fear that continued reliance on indirect taxation and corporate levies will eventually make everyday essentials more expensive.
The super tax was first introduced in 2016 as a temporary measure but has since been repeatedly extended. It is essentially an additional levy on high-income sectors and corporations to raise extra revenue for economic stabilisation.
In the 2022–23 budget, the government imposed up to 10% super tax on major sectors including cement, steel, sugar, oil and gas, fertiliser, textiles, and banking. The move was justified as necessary to meet Pakistan’s IMF commitments and boost tax collection in a struggling economy.
However, critics argue that it creates distortions, penalises productive sectors, and indirectly hurts consumers.
During Monday’s hearing, the FBR’s lawyer Hafiz Ehsan requested additional time to present constitutional arguments, but the court adjourned proceedings until Tuesday due to scheduling conflicts.
The outcome of the case will have far-reaching implications. If the Supreme Court rules that super tax on provident funds is unconstitutional, it could provide relief for millions of employees and set limits on the government’s ability to impose new levies. On the other hand, if upheld, the ruling would reinforce the government’s authority to continue using super tax as a tool for revenue generation.
For now, the case has sparked nationwide debate over whether Pakistan’s taxation policies prioritize fiscal stability over the welfare of ordinary citizens and whether the so-called “temporary” super tax is here to stay.