Govt mulls slapping up to 70% Windfall Tax on banking sector's lofty profits.

ISLAMABAD -- The government is considering slapping a Windfall Tax on the profits of the banking sector in the range of 50% to 70% similar to the one used in the West, which imposed the same tax on energy companies, reported media on Friday.

'Different proposals are under consideration for imposing the Windfall Tax on profits earned by the banking sector. A fixed tax rate from 50% to 70% is expected to be slapped for getting revenues out of the lofty profits earned by the banks,' officials, who spoke on the condition of anonymity, told the publication.

However, sources in the Federal Board of Revenue (FBR) said that the proposal is yet to be approved by the government though Finance Minister Ishaq Dar had hinted in his press briefing on Wednesday that the government would move ahead with the Windfall Tax on the banking sector.

The government is ascertaining the exact levels of windfall profits extracted by the banking sector through recent currency manipulation. The policymakers may slap a tax at a rate whereby there is no threat of choking the banking sector.

The tax officials who are working on this proposal studied the Windfall Tax imposed by the United Kingdom, Austria, Italy, Australia and other countries whereby the energy companies had earned lofty profits in the aftermath of Russia-Ukraine war, so the respective governments had imposed the Windfall Tax to generate revenue. Even the Biden administration in the USA had threatened to impose Windfall Tax.

The recent energy crisis across Europe as a result of COVID-19, poor market decisions and the Ukraine war have pushed energy prices to all-time high.

Countries across Europe were moving to build up reserves in the face of restricted gas supplies to...