The Advisor to Prime Minister on Finance, Shaukat Tarin, has said that the rate of 16 percent sales tax is very high, which would be brought down to a single digit--in the next 4-5 years. During the post-budget press conference held at the Planning Commission here on Sunday, he said that the government would try to reduce sales tax rate during next fiscal year.
The 16 percent sales tax rate is very high, and the government wants to bring it down to a single digit. "When the tax base is broadened, sales tax rate would be definitely brought down," he added. He said that there is no sales tax on food items and health products being consumed by the general public.
About capital value tax (CVT) on property, he said that it is expected that the provinces would now collect double amount of CVT on real estate, as the rate of CVT has been increased in the budget. He said that the government had reduced sales tax on telecom sector from 21 percent to 19 percent. Moreover, the government has also brought down duty on import of mobile phone handsets from Rs 500 to Rs 250. On the other hand, only 20 paisa tax had been imposed on every SMS.
"People are extensively using SMS, even more than what they spend on eating. This is a minimum increase as the government has already provided relief to the telecom industry," he added. He said that the government has followed the policy of progressive taxation in the 2009-10 budget, instead of regressive taxation. He said that withdrawal of 5 percent excise duty on locally produced motorcars would reduce their prices.
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