IMPACT OF HEAVY TAXATION ON EDIBLES

SUBMITTED BY: Syed Hussain Ahmed A Report Submitted For Writing Research Report

SUBMITTED TO: Dr. Zaira Wahab

IQRA UNIVERSITY, KARACHI SUBMITTED ON DATE: 15th of December, 2010

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Heavy Taxation On Edibles Pg # 1 ACKNOWLEDGEMENT

I the student of the IQRA UNIVERSITY, extend my greatest thanks for Almighty ALLAH Who is the source of all knowledge and wisdom endowed to mankind and to the humanity as a whole. I would particularly like to thank Dr. Zaira Wahab for many insights she provided me throughout this Time writing research report. Discussions with her have also proven most helpful. The encouragement and assistance of my parents and friends are gratefully acknowledged. Most of all, I wish to thank who provided us the important and relevant information to complete this report. This report would never have been possible without the contribution of the participants who took time off to complete our questionnaires. All the friends and supporters who helped are acknowledged for putting in their effort, hard work & willingness in this reports fulfillment. It is beyond doubt that I really owe this to my teacher. I have endeavored to come to your expectations which surely will go rewarded.

2012-02-22 LETTER OF TRANSMITTAL December, 2010 DR: Zaira Wahab Instructor: Writing Research Report Dear Miss. Zaira Wahab

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Here is the report on heavy taxation on edibles submitted, which I am required to submit as per our course requirement. All praises and thanks are for Almighty ALLAH Who is the source of all knowledge and wisdom endowed to mankind and to the humanity as a whole. I would particularly like to thank MRS. DR Zaira Wahab (Instructor: IU) for many insights she provided us throughout this report. Discussions with her have also proven most helpful. This report is based and presented on taxation on edibles. I have conducted a survey on fifty people, asking them about their income, consumption, etc. Sincerely, Syed Hussain Ahmed (11511) IQRA UNIVERSITY, KARACHI

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TABLE OF CONTENT

SECTION ONE * Introduction Background Review Statement of problem Scope Justification Limitations Following are the design for this topic Hypothesis SECTION TWO * Methodology

4 4 4 4 4 5 5 5 6 6 7 7 7 8 9 9 10 11

Research design Population and sample Instrumentation

Pilot testing Ethical consideration SECTION THREE

* Anaylsis , Summary , Recommendation........................................................11

Analysis
Summary Recommendation References.

13 24 24 24

2012-02-22 QUESTIONNAIRE

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Heavy Taxation On Edibles Pg # 3 SECTION ONE Introduction

1.1: Background Means by which governments finance their expenditure by imposing charges on citizens and entities. Taxation on edibles is a very hot issue in the society where income level is quite low. As taxation on edibles causes lower waged people to suffer in such high inflation and to struggle to meet their both ends. Taxation on edibles should be kept flexible so that one should not have to cut back his other basic needs to survive. This research is useful for the people of every society which are striving to have a living. As this research will prove to be helpful to higher tax handling authorities to adjust any flaws that could sort out the problems of the society. Nowadays heavy taxation on edibles is getting out of limit. 1.2: Review We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle Winston Churchill quotes When there's a single thief, it's robbery. When there are a thousand thieves, its taxation. Vanya Cohen I am thankful for the taxes I pay because it means that I'm employed. Nancie J. Carmody The best things in life are free, but sooner or later the government will find a way to tax them. Author Unknown The income tax created more criminals than any other single act of government. Barry Goldwater Inflation is taxation without legislation Milton Friedman

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1.3: Statement of Problem As families and small businesses are struggling to survive in the current economy. A tax on food and beverages will have a negative impact on families and an industry that provides hundreds of thousands of goodpaying jobs in communities across the country. Hard-working families are holding their own in this tough economy, but they can't afford higher grocery prices. There could not be a worse time to ask middle-income families to pay any more in taxes. These taxes will just further squeeze families already struggling to make ends meet. Higher taxes will threaten jobs and stymie job growth. That's the last thing we need in this economy. We need policies that promote job creation not to demote them. 1.4: Scope The scope is limited to all households of every society and small businesses who have a hard time to cope with the taxation that affect their life. As increase in inflation thus increase in taxation on every part of life. Thus this research is related to every low income household that are affected by the taxation on edibles and trying to repel it.

1.5: Justification The justification of this study rests on the following specific consideration: This research is going to assist the policy markers of government in regarding taxation. As research conducted on taxation is giving a contribution on lowering or exempting the taxation on edibles to have a better life. This research is going to help the households in identifying their right of taxation to sort out Up to what extent taxation should be charged. This research can help varies information handler and search engines in addition to their already existing issues or to update.

2012-02-22 1.6: Limitations Following are limitation of this study.

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This study is completed in just 60 days (limited time period). Study conducted by a student. (1st research). Financing for this research is done by student itself. (limited finance)

1.7: Following are Questions Design for this Topic Q 1: Should there be any kind of taxes levied on edibles? Q 2: Whether there should be heavy taxation on prepared meals at restaurant/ clubs? Q3: Should poor be affected by rise on price of edibles with cost of living increasing? Q4: Are lower income affected exactly same by heavy taxation on edibles as a middle class & lower class do?

1.8: Hypothesis Following is a hypothesis of research.

Undue rising of taxation on edibles cause negative impact on consumers.

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SECTION TWO

Methodology 2.1: Research Design The following research design was used by researchers to collect data.

2.2: Population and Sample All the households and people who are affected by heavy taxation, low government income people and the areas society that is suffering from high inflation, low wages and heavy taxed edibles and struggling to survive.

I have selected the population of 500 from the City Karachi in which I included various Income level households. Then I have taken a sample of 50 in which 12 households are from DHA town and 18 are from Saddar town and 18 are from North Nazimabad town. In sample DHA town 6 of them are high income level households and 6 are lower income. Saddar towns 9 of them are high income level households and 9 are lower income sample. And in North Nazimabad town 9 of them are high income level households and 9 are lower income sample.

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2.3: Instrumentation The question were designed by research for this study and it consist of ten questions in which eight were open ended and the last two were hypothesis.

Simple category scale Multiple choice single response Multiple choice multiple response Likert scale Numerical scale Multiple rating scale Graphic rating scale

2.4: Pilot testing The draft questionnaire was administered on two responded. They were made to fill up questionnaire. This was done to screen the questionnaire in terms of Wording, Clarity, Meaningfulness and Scoring.

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2.5: Ethical consideration

Following ethical consideration was used to the context of study. Respondent were assured that the data collected will be secured and will be used purely for research purpose. Identification of respondents was kept anonymous. Before conducting research formal consent was taken. Language was screened and was not used to challenge or hurt anyone. Due acknowledgment was given to all those to help who helped in this research.

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Heavy Taxation On Edibles Pg # 3 SECTION THREE Analysis, Summary and Recommendation

3.1: Analysis The data collected through questionnaire is explained briefly in this section. The following were asked in the questionnaire Q 1: What income group do you belong to? Higher level (50,000-Above) Average (20,000-50,000) Lower level (Lower-20,000) Confidential

Higher level Average Lower level confidential

15 40 30 10

Q 2:

According to the survey 44% earn average income According to the survey 28% earn higher income According to the survey 15% earn lower income According to the survey 13%kept confidential

How much did you spent on groceries this week? Below 5000 5000 15000 15000 25000

2012-02-22 25000- Above

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Below -5000 5000-15000 15000-25000 25000-above

19 17 9 5

2012-02-22 Q 3:

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According to survey 19 have below 5000 spending on grocery According to survey 17 have below 5000-15000 spending on grocery According to survey 9 have below 15000-25000 spending on grocery According to survey 19 have below 25000-above spending on grocery Do you agree with the Governments regulation of taxation on edibles? In enhancing the economy? Yes No Maybe Dont know

According to survey have 9 govt regulation is yes According to survey 17 govt regulation is no According to survey 9 govt regulation is maybe According to survey 19 govt regulation is dont know

2012-02-22 Q 4:

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What type of edibles you think should not be Taxed at all? To provide ease to people? Meals at restaurants, soda, liquor etc. Ready cooked meals on deli (canned/packed) Daily grocery items Every edible

According to survey restraint meals provide 18% relief. According to survey cooked meals provide 20% relief. According to survey grocery provides 38% relief. According to survey every meal provide 24% relief.

2012-02-22 Q 5:

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Which class is Financially disturbed by taxation on Grocery edibles?

According to the survey 4 says Elites are disturbed. According to the survey 10 says middle are disturbed. According to the survey 27 says lower are disturbed. According to the survey 9 says none are disturbed.

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Q 6: Should edibles (Nutritious or Not) which lead to obesity be taxed?

STRONGLY AGREE

AGREE

NEITHER DISAGREE NOR AGREE 3

DISAGREE

STRONGLY DISAGREE 1

5 people strongly agree 10 people agree 13 people neither disagree nor agree 22 people strongly disagree

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Q7: How much do you agree on waiving of taxation on the following, In order to sustain the revenue from edibles? Dairy products Legumes (pulses) Vegetables and Fruits 5 5 4 4 3 3 3 3 2 2 2 2 1 1 1 1

5 4 Obese food (beverages and prepared meals) 5 4

7 say obese shouldnt be taxed 10 say dairy shouldnt be taxed 13 say legumes shouldnt be taxed 12 say vegetables shouldnt be taxed

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Q 8: How much does taxation exemption or subsidies on following provides relief to you? Upto what level? At high level Restaurants meal Grocery (vegetable & meat) Basic necessities (pulses etc) Beverages & packed meals 6 6 6 6 5 5 5 5 4 4 4 4 3 3 3 3 2 2 2 2 Low level 1 1 1 1

10 say that restaurant taxation should provide relief. 10 say that grocery taxation should provide relief. 13 say that basic necessity taxation should provide relief. 12 say that beverages taxation should provide relief.

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Q 9: Upto what extent does Reformed General Sales tax (RGST, 2010) on edibles affect the economy of a country? (It will be going Upto 25 % from 17 % on goods that leave impact on edibles and dairy will be taxed Upto 25%). 100% 75% 50% 25%

According to survey 21 people think 100 %will affect According to survey 11 people think 75% will affect According to survey 10 people think 50%will affect According to survey 6 people think 25% will affect

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Q10: Do you prefer/support taxation on all edibles? Upto which extent? (Place a mark along the meter to reflect your judgment)

According to survey 32% are not happy with regulation of tax. According to survey 18 % are happy with regulation of taxation.

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Q 11: Increase in food expenditure causes the purchasing power of household to decline due to which his social welfare declines. Yes No Maybe Dont know

According to survey 23 say yes According to survey 11 say no According to survey 10 say maybe. According to survey 6 say dont know.

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Q 12: Food purchasing patterns depends on household income & the impact of changes in prices of edible is much greater in low-income society. Yes No Maybe Dont know

According to survey27 say yes According to survey 15 say no According to survey 6 say maybe According to survey 2 say dont know

2012-02-22 3.2: Summary

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I have selected this topic because it is the root cause of many social and government issues. This research can help in solving many issues. When taxation raises the whole economy shoot n hits bang thus hurting the person who are trying to meet both ends. 1. You may experience extreme taxation as and usually gives rise to inflation which in no time becomes an uncontrollable fire. 2. You become helpless because you can't do anything about it. You are too powerless to control the high prices and thus most people suicide or just adopt wrong means to have a living. 3. Its a regressive tax. As a percentage of income, lower-income families pay much more than upper-income families 4. Its anti-family. Households with several dependents are taxed more heavily as a percentage of household income than those without dependents. 5. When times are tough you can cut back on a lot of things, but food is such a basic need 6. Taxing food would broaden the tax base allowing for a lowering of the tax rate and funds to provide relief to low-income taxpayers

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3.3: Recommendation Policy maker must go through student research to take guide from this research conducted. And take a guide from this report. Relief for low-income taxpayers can be provided in other ways such as a refundable income tax credit or government issued food vouchers. This approach better targets the relief Food purchasing patterns depends on household income low-income households spend their money on food efficiently by buying more economical brands of food items. Average consumption of food declines with the decline in income

3.4: References: www.google.com www.yahoo.com J-store.org RGST law book

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QUESTIONNAIRE
Name: __________ Gender: MALE / FEMALE Note: I, student of IQRA UNIVERSITY is conducting a Research on the above given topic, this Questionnaire is for my Writing Research Report; this doesnt mean to hurt or accuse anyone. The information collected or used in this questionnaire is solely used for research purposes and will not be used for wrong purposes. *Please shade or mark the following to reflect you judgment. Q 1: What income group do you belong to? Higher level (50,000-Above) Average (20,000-50,000) Lower level (Lower-20,000) Confidential Q 2: How much did you spent on groceries this week? Below - 5000 5000 - 15000 15000 - 25000 25000- Above Q 3: Do you agree with the Governments regulation of taxation on edibles? In enhancing the economy? Yes No Maybe Dont know Q 4: What type of edibles you think should not be Taxed at all? To provide ease to people? Meals at restaurants, soda, liquor etc. Ready cooked meals on deli (canned/packed) No. of family members: ___________ Age: ___________

2012-02-22 Daily grocery items Every edible

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Q 5: Which class is Financially disturbed by taxation on Grocery edibles?

Q 6: Should edibles (Nutritious or Not) which lead to obesity be taxed? STRONGLY AGREE STRONGLY DISAGREE 5 4 3 2 1 AGREE NEITHER DISAGREE NOR AGREE DISAGREE

Q 7: How much do you agree on waiving of taxation on the following, In order to sustain the revenue from edibles? Dairy products Legumes (pulses) Vegetables and Fruits 5 5 5 4 4 4 3 3 3 2 2 2 1 1 1

Obese food (beverages and prepared meals) 5 4 3 2 1

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Q 8: How much does taxation exemption or subsidies on following provides relief to you? Upto what level? At high level Low level Restaurants meal 6 5 4 3 2 1

Grocery (vegetable & meat)

Basic necessities (pulses etc) 1

Beverages & packed meals

Q 9: Upto what extent does Reformed General Sales tax (RGST, 2010) on edibles affect the economy of a country? (It will be going Upto 25 % from 17 % on goods that leave impact on edibles and dairy will be taxed Upto 25%). 100% 75% 50% 25% Q10: Do you prefer/support taxation on all edibles? Upto which extent? (Place a mark along the meter to reflect your judgment)

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Q 11: Increase in food expenditure causes the purchasing power of household to decline due to which his social welfare declines. Yes No Maybe Dont know Q 12: Food purchasing patterns depends on household income & the impact of changes in prices of edible is much greater in low-income society. Yes No Maybe Dont know