The stock brokers and members of the Lahore Stock Exchange (LSE) in a meeting on Wednesday discussed alternative proposals of the capital value tax (CVT), including raising withholding tax from 5 percent to 10 percent and curtailing CVT from 0.1 percent to 0.01 percent.
LSE Chairman Syed Asim Zafar briefed the participants on the package of proposal prepared by the exchange before leaving for Islamabad, where he was to join heads of Karachi and Islamabad stock exchanges for a meeting with Finance Minister Shaukat Aziz and the authorities of the Central Board of Revenue (CBR).
A heated debate took place on the issue of CVT and alternative proposals, which included curtailing it to 0.01 percent from 0.1 percent, enhancing withholding tax to 10 percent from 5 percent and levy of 10 percent tax on capital gains, taxing carryover transactions and difference in the bill of trading. The meeting also deliberated upon complete abolishment of CVT.
Majority of the participants were of the view that CVT should be completely abolished, a broker who attended the meeting told Business Recorder. However, he said, the meeting arrived at the consensus on two proposals as an alternative of the CVT, ie, raising the withholding tax to 10 percent from 5 percent and curtailing the CVT to 0.01 percent from 0.1 percent.
He said that the three exchanges have almost consensus over these two alternative proposals. It was also resolved that in case of settlement of the issue in Wednesday's meeting, these taxes would be collected by the stock exchanges from the brokers on the pattern of service charges, etc.
The participants also agreed that the burden of these taxes would not be passed on to the investors. Moreover, it would be the final settlement and the government would not levy any other tax on the brokerage houses.
The issue is likely to be settled in the stock exchanges meeting with the finance minister on Wednesday evening, he hoped.
He, however, was of the view that in case of agreement on these taxes, the market would recover temporarily and would be suffering in the long-term. The investors would be very careful in trading in the stock market, which would badly affect the turnover, he added.