Members and investors of Lahore Stock Exchange (LSE) have expressed deep concern and apprehensions over the doubling of capital value tax (CVT), withholding tax, and presumptive tax, which were proposed in the budget 2006-07, for shares transactions.
It was pointed out in a meeting held here on Thursday that stock exchange trades were already being taxed and it was totally inappropriate to further burden the investors. With such magnitudes, the Central Board of Revenue (CBR) will not be able to broaden the tax net but the massive increase in cost of transactions would result in sharp decline in trading volume and disturb price-discovery mechanism.
It will also jeopardise the privatisation process, resulting in possible decline in tax collection by CBR under these heads. It will further dampen the investment in the country and discourage the capital formation, which is essential for country's economic development and to face the global competition, under WTO regime.
To avoid further erosion in the market, it was urged in the meeting that the proposed addition in the tax rates should be withdrawn immediately to save the investors and the capital market from suffering more losses, before it is too late.
Meanwhile, LSE Managing Director Hamid Imtiazi, expressed his concern over the recent sharp downturn of the stock exchanges' index. Told Business Recorder that it was the result of the 100-percent raise in CVT and other taxes on the stock transactions and the market faced with no internal problems such as default of any member.
As far as the LSE is concerned, there is no such problem and no member faces default, he clarified when his attention was drawn towards rumours in this regard.
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