MANNO
Councller (250+ posts)
Friday, May 21, 2010
By Ikram Hoti
ISLAMABAD: The forthcoming budget has a surprise for all Pakistanis as President Asif Ali Zardari here on Thursday allowed budget makers to frame a dual taxation plan for the country.
In a meeting with an International Monetary Fund (IMF) representative in Pakistan, a team of the Finance Division and the Federal Board of Revenue chairman has sought details about the plan and directed all stakeholders to hold a joint meeting for paving the way for the implemention of Value Added Tax (VAT).
The meeting of the top budget makers with the representative was meant to seek approval for the Fiscal Plan 2010-2011, which will now be split into two parts incase the stakeholdersthe government of Sindh, the business community, the FBR and the Finance Divisionfail to arrive at some consensus on the VAT.
The top tax managers met the IMF experts in Doha over the past couple of days and it transpired that one part of the budget to be launched in June 2010 will be for implementing the VAT in accordance with agreement with the IMF, while the other would be for implementation of tax under existing laws.
The latter plan is being chalked out to adjust to the need for launching the budget without VAT, in case the opponent side continues to mount pressure on the government against VAT. When asked whether the top budget makers discussed the two plans with President Zardari, FBR spokesman Israr Rauf said before the meeting that the president only knew that a meeting was scheduled to discuss the Sindh governments reservations on the VAT.
However, sources said the two plans were discussed as a political issue more than a public finance and economy issue. They added the government was also planning to change the GST rates for major industries like plastic, steel, sugar, food etc, in case VAT was decided to be the overriding part of the next budget.
Apart from this, the budget makers are set to make an unusual move by offering national projections to reassure the people that their tax money would be used for development and relief and not on luxurious allocations for the government.
Sources said that a list of actions would be part of the budget for the first time, showing that the development projects would now be time-lined for meeting infrastructure needs, cultural activity promotion, health and schooling etc. Apart from it, a monitoring mechanism would be announced to ensure that the timelines are met and the money is not misused.
Government and opposition parliamentarians besides civil society organisations will be part of the monitoring activity to lend it credibility. VAT would be launched also by removing some of the tax exemptions enjoyed by certain food items, said sources. They added another major action would be introducing 10 per cent Capital Gains Tax on the stocks profits.
This action is not being taken to increase the collectible tax money but to stabilise stock markets, said a senior official supervising the budget-making process. He added there were little prospects that the tax on stocks would be used to increase revenues, as the edgy players in the market would be prevented from indulging in unrealistic selling that causes panic.
Such selling is induced by partial gains by holders of stocks that possess larger shares and the more expensive ones. Stabilisation, he said, would be facilitating the small shareholders that lose dearly in times of upheavals caused by panic selling.
http://www.thenews.com.pk/top_story_detail.asp?Id=28990:banghead:
By Ikram Hoti
ISLAMABAD: The forthcoming budget has a surprise for all Pakistanis as President Asif Ali Zardari here on Thursday allowed budget makers to frame a dual taxation plan for the country.
In a meeting with an International Monetary Fund (IMF) representative in Pakistan, a team of the Finance Division and the Federal Board of Revenue chairman has sought details about the plan and directed all stakeholders to hold a joint meeting for paving the way for the implemention of Value Added Tax (VAT).
The meeting of the top budget makers with the representative was meant to seek approval for the Fiscal Plan 2010-2011, which will now be split into two parts incase the stakeholdersthe government of Sindh, the business community, the FBR and the Finance Divisionfail to arrive at some consensus on the VAT.
The top tax managers met the IMF experts in Doha over the past couple of days and it transpired that one part of the budget to be launched in June 2010 will be for implementing the VAT in accordance with agreement with the IMF, while the other would be for implementation of tax under existing laws.
The latter plan is being chalked out to adjust to the need for launching the budget without VAT, in case the opponent side continues to mount pressure on the government against VAT. When asked whether the top budget makers discussed the two plans with President Zardari, FBR spokesman Israr Rauf said before the meeting that the president only knew that a meeting was scheduled to discuss the Sindh governments reservations on the VAT.
However, sources said the two plans were discussed as a political issue more than a public finance and economy issue. They added the government was also planning to change the GST rates for major industries like plastic, steel, sugar, food etc, in case VAT was decided to be the overriding part of the next budget.
Apart from this, the budget makers are set to make an unusual move by offering national projections to reassure the people that their tax money would be used for development and relief and not on luxurious allocations for the government.
Sources said that a list of actions would be part of the budget for the first time, showing that the development projects would now be time-lined for meeting infrastructure needs, cultural activity promotion, health and schooling etc. Apart from it, a monitoring mechanism would be announced to ensure that the timelines are met and the money is not misused.
Government and opposition parliamentarians besides civil society organisations will be part of the monitoring activity to lend it credibility. VAT would be launched also by removing some of the tax exemptions enjoyed by certain food items, said sources. They added another major action would be introducing 10 per cent Capital Gains Tax on the stocks profits.
This action is not being taken to increase the collectible tax money but to stabilise stock markets, said a senior official supervising the budget-making process. He added there were little prospects that the tax on stocks would be used to increase revenues, as the edgy players in the market would be prevented from indulging in unrealistic selling that causes panic.
Such selling is induced by partial gains by holders of stocks that possess larger shares and the more expensive ones. Stabilisation, he said, would be facilitating the small shareholders that lose dearly in times of upheavals caused by panic selling.
http://www.thenews.com.pk/top_story_detail.asp?Id=28990:banghead:
