EEC mulling over plan: People in upper income basket may share subsidy burden

ISLAMABAD: The government is likely to impose one-time tax on 5 percent people in the upper income basket to finance subsidy to the poor and extend subsidy of Rs 1,500 to poor people to compensate them for burden caused by higher price of petrol, electricity and gas.

This plan was discussed at a meeting of Economic Executive Council (EEC) headed by Minister for Finance and Revenue, Shaukat Tarin on February 22, 2022. The Council discussed progress on l0-point agenda received from the Prime Minister’s Office on January 31, 2022.

The meeting discussed the proposal on Gold-based Negotiable Instrument. Other items on the agenda included incentivizing SMEs, DAP subsidy, establishing Duty Free Zones, investment in real estate through foreign exchange, foreign current investment insurance pool, incentivizing relocation of industry from China, Saudi Oil facility and SBP counters at airport for debt card issuance were discussed in detail. EEC also discussed additional items on the agenda.

During discussion on the proposal of Gold based Negotiable Instruments, President National Bank of Pakistan informed the EEC that broad outline including the issuance of certificate for the quality and quantity of gold from approved jewellers was sent to Tahir Mehmood, a key man in Prime Minister’s Office for comments.

The SBP informed the EEC that Pakistan Mercantile Exchange Company (PMEX) has the capacity to handle the gold effectively.

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It was decided that SBP along with NBP and Tahir Mehmood may discuss and finalize and actionable operational steps.

The objective of the gold based negotiable instruments is to translate gold into foreign currency to enhance foreign exchange reserves.

Incentivizing SMEs through tax/regulatory regimes & investments also came under discussion. Minister for Industries and Production, Khusro Bakhtyar informed the EEC that they are sharing a detailed plan for the development of SME with PMO very soon.

Commenting on the proposal of subsidy on DAP subsidy, the Minister said, a production plan for the next ten years including subsidy estimates is near completion and will be shared soon.

On the proposal of establishing Duty Free Zones, it was decided that FBR will play a lead role in this regard. Chairman FBR will consult the relevant stakeholders and submit the actionable plan at the earliest.

The EEC discussed different options to attract investment in real estate through foreign exchange.

Chairman Naya Pakistan Housing & Development Authority (NAPHDA) informed the EEC about availability of land, selling of plots and flats to overseas Pakistanis and its modalities. The Council decided that NAPHDA will formulate a monthly plan, starting from March till December, on the availability of plots/flats and also prepare a comprehensive strategy to give a sense of trust to overseas Pakistanis.

During discussion foreign currency investment insurance pool, SBP informed the EEC that detail proposal has already been shared with the Ministry of Finance for comments. The Council decided that the Ministry of Finance may share the comments and inputs for the improvement of the proposal. Prime Minister’s Advisor on Commerce and Investment, Chairman Board of Investment and President NBP will give final touches to the proposal.

The EEC also reiterated its earlier decision about incentivizing relocation of industry from China. Minister for Planning, Development and Special Initiatives was requested to share a detailed action plan for relocation of Chinese industry to SEZs.

The EEC also discussed the much talked about Saudi oil facility. Minister for Energy, Hammad Azhar stated that the agreement will be signed by end of next week i.e. current week.

The EEC also reiterated the earlier decision which states that Petroleum Division will establish a Monitoring Cell for the utilization of Saudi oil facility.

Pre-paid cards: NBP informed members of EEC about the initial proposal for issuance of pre-paid cards at the airports.

It was decided that NBP will establish counters at Islamabad, Lahore, Karachi, Multan, Sialkot and Peshawar airports to issue prepaid cards within two weeks. NBP may also offer additional option of Asaan Digital Account/Debit Card.

US Dollar linked Certificates: The EEC decided to resolve the matter and make final decision on US dollar linked certificates immediately. Ministry of Finance has been directed to do it as early as possible.

Motor Bike Taxi Schemes: EEC decided that NBP may consult Saqib Shirazi/Motor Bike Manufacturers and Tahir Mahmood to finalize the modalities, financing needs and registration process. NBP may consult the banks that are already financing motor bikes and may make a separate cell for this scheme. NBP may also share the proposal with provincial governments.

The EEC also discussed the proposal for providing Rs 1500 to poor people to compensate them for burden caused by higher prices of petrol/electricity and gas. EEC decided to seek inputs from all members on the proposal and also on possibility of a one-time tax on 5 per cent people in the upper income basket to finance subsidy to the poor.

The meeting was attended by the Minister for Economic Affairs, Minister for Industries and Production, Chairman NAPHDA, Governor SBP, Chairman FBR, Tahir Mahmood (PM Office), President NBP and officials of SBP, NBP and Finance Division.

Copyright Business Recorder, 2022