ISLAMABAD (June 23 2010): Finance Minister Dr Abdul Hafeez Sheikh on Tuesday said the government is determined to introducing reformed General Sale Tax (GST) from October 1 to withdraw exemptions, which would be a major step towards documentation of the economy.
Winding up the debate on budget in the National Assembly, the Finance Minister said the budget would protect the Federation, strengthen provinces and take money close to the people and away from bureaucracy. The minister claimed that measures taken in the budget would counter inflation. He said the reformed GST is the only way to get to the people not paying their share for the prosperity of the country.
The GST reform would help move towards direct taxes through documentation of peoples' earning. Hafeez urged politicians across the political divide to make up their mind to reform the GST as the existing system has been distorted by the powerful lobbies by taking exemptions. This would not have any inflationary impact on the poor because it would not be applicable on food commodities, health and education sectors. The Finance Minister said some people are opposing it to protect their interests and are against changing the status quo.
The minister said direct taxes would be reformed in a way that it does not involve harassment of people by the officials of Federal Board of Revenue. He said the government should accept that its performance in some areas remained weak particularly in Public Sector Enterprises (PSEs) and called for developing consensus across the political divide on the issue. Hafeez said these entities are making hostage the whole economy.
"We have to decide whether the role of the government is to run the business or to run the government," he said that in all the sectors of the economy the government institutions are operating. Neither these institutions are improving their efficiency nor letting others in these sectors. The minister gave an example of Pakistan Steel Mills that was demanding Rs 25 billion bailout package but told the House that no one would be provided Rs 25 billion public money. "Let us make a Parliamentary Committee of the House to agree on this issue," he made an offer to the opposition. He also informed the House that the government has decided to incorporate in the budget 61 proposals out of 74 forwarded by the Senate including restructuring of Public Sector Enterprises as well as austerity measures besides many others.
The minister said the 11 days discussion by 158 parliamentarians on the budget was highly productive and reflective of democratic culture and underlined the need for working together across the political divide on economic issues. He said his first and foremost priority would be to protect the economic recovery achieved after the bold decisions of the government during the last two years. He claimed that because of government's bold decisions economic growth has gone up to 4 percent and inflation has been brought down to 12 percent.
He said this was the first budget that was openly discussed on media and nothing was kept secret and what was more important was that this was first post National Finance Commission (NFC) Award and 18th Constitutional Amendment budget whose positive impacts would be exposed on the masses gradually. Defending the budget, he said it would protect the Federation, strengthen provinces and take money closer to the people and away from bureaucracy.
The minister said he would sincerely say that central features of the budget are people of Pakistan and the measures taken in it would not contribute to inflation. The budget would counter the inflation as fiscal deficit has been fixed at 4 percent and the government expenditures have been frozen. The minister also informed the House that the Prime Minister and the President House have voluntarily agreed to freeze their expenditures while only targeted subsidies would be provided to poor.
He said Rs 463 billion Annual Development Programme for next fiscal year is historic in terms of allocation. While responding to a point of the opposition leader that use of four to five vehicles by each minister is contrary to the government austerity measures, Hafeez said all he could say is that it is a shameful for ministers using so many vehicles.
Copyright APP (Associated Press of Pakistan), 2010
Source : http://www.brecorder.com/
Demand Analysis and Tax Reform in Pakistan (Lsms Working Paper) (No. 85)
Income Tax Law of Pakistan
Vista Point DUBAI United Arab Emirates (NTSC)Prices, taxes, and subsidies in Pakistan agriculture, 1960-1976 (World Bank staff working paper)
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