To raise money for flood victims: government should reallocate Rs 15.9 billion workers fund

An easy way to generate additional amount for the flood victims is to reallocate an amount of Rs 15.9 billion collected under the head of Workers Welfare Fund (WWF) and Workers'' Profit Participation Fund (WPPF) in 2009-10 for the infrastructure development of the flood affected areas.
Sources told Business Recorder here on Tuesday that the Federal Board of Revenue (FBR) has collected approximately Rs 15.9 billion from the WWF and WPPF in 2009-10. The collections under these heads have been made by the FBR, but the amount goes to the Ministry of Labour and Manpower for spending on the welfare of the labour community.
If the federal government allows the Ministry of Labour to reallocate the amount to the victims of devastating floods, enough funds would be available through internal resources. The infrastructure development is the prime task for the flood-affected areas for which the said amount could be effectively utilised. However, the proposal could not be materialised till the concurrence of the Ministry of Labour and Manpower. Another option is that the FBR could move a summary to the Ministry of Finance for allocation of the amount for the rehabilitation of the flood affectees.
Sources said that such funds put an extra burden on the companies, as the overall burden of taxation comes to around 42 percent on companies. Beside 35 percent tax on companies, the imposition of the 2 percent WWF and 5 percent WPPF result in overall taxation of 42 percent on companies. The government should allow the companies to spend themselves such funds on the welfare of labours working in such companies.
The Ministry of Finance can make allocations of the WWF for utilisation on the flood victims on the recommendation of the FBR, if required, sources added. The federal government has fixed target of Rs 20 billion from WWF during 2010-11, sources added.
Under the Workers'' Welfare Fund Ordinance, 1971, any industrial establishment as defined in the Ordinance, having total income is Rs 500,000 or more is required to pay 2 percent of its total income under the Income Tax provisions, to the Workers'' Welfare Fund. The Ordinance has extended the scope of industrial establishment by including establishments formed under West Pakistan Shops and Establishment Ordinance, 1969, resulting in every business concern, having total income of Rs 500,000 or more in a tax year, being liable to WWF.