Finance Minister Dr Abdul Hafeez Sheikh on Saturday dismissed the impression that brewing stain in relations between Pakistan and US over intrusion of helicopters that killed Osama bin Laden at Abbottabad may have a negative impact on assistance. The Minister was talking to reporters after the Economic Advisory Council (EAC) meeting.
In reply to a question that US may suspend pledged assistance in the wake of recent incident, Hafeez Sheikh said there is no such danger as economic relations between the two countries were at government to government level. Economic Affair Division, Secretary was also of similar view and stated that the incident would not damage economic ties and assistance promised by the US.
The EAC has decided to hold meetings in all the four provinces to persuade the provincial governments for taxing agriculture income after it failed to convene them in the federal capital. The provinces were invited to participate in the EAC meeting on Saturday but except Finance Minister and Secretary Finance Khyber Pakhtunkhwa none of the representative from other provinces turned up in the meeting chaired by Finance Minister, Dr Abdul Hafeez Sheikh and convened by Dr Hafiz Pasha.
The meeting decided to consult the legal experts for seeking their opinion whether federal government could impose Gross Asset Tax (GAT) in replacement of turn over tax after the passage of 18th Constitutional amendment. Hafeez Sheikh told reporters that it has been decided in principle not to increase tax rate but existing taxation system would be made more equitable by bringing the people, who are not paying taxes, into the tax net. He said that the federal cabinet would decide about the salaries of government employees.
The convenor of the Committee, Dr Hafiz Pasha said that EAC view point was that projected revenue collection target of Rs 1950 for the next year was unrealistic and must be made rational. He said that with the normal growth revenue target by next year could be Rs 1775 billion and if Rs 75 billion additional revenue collection on account of withdrawal of exemption is included, it could reach to Rs 1850. He said that revenue rationalisation was also important to ensure that Public Sector Development Programme (PSDP) was not affected.
Pasha said that positive development on agriculture tax with the provinces would make imposition of GAT much easier and explained that it was not an additional tax but alternative minimum. He said that the people declare their income less than their visible assets, hence it was being considered to bring their assets into the tax net. Hafeez said that GAT would be adjustable for the people paying income tax.
Operational budgetary proposals were presented by working groups of EAC including taxation, energy, capital markets, international trade, banking sector reforms, agriculture, international competitiveness and economic growth. The meeting discussed in depth about broadening the tax net, ensuring equity in tax system, overcoming energy shortages, capital markets & banking sector reforms and undertaking key micro economic reforms to improve competitiveness of industry and agriculture.
The EAC discussed that public debt management would be improved to reduce burden on government exchequer in terms of debt servicing. It was decided that professional experts might be engaged to strengthen capacity of key institutions of the government.
It was decided that a core group of EAC would hold meetings with the representatives of provincial governments to discuss revenue mobilisation efforts at provincial level. The next meeting of EAC will be held after meetings with the provincial governments.
The meeting was attended by Dr Hafiz A. Pasha (Convenor EAC), Deputy Chairman, Planning Commission, Governor, State Bank of Pakistan, Muhammad Hamayun Khan, Finance Minister (Khyber Pakhtunkhwa), senior officials and members of EAC including Syed Salim Raza, Farooq Rahmatullah, Nasim Beg, Dr Aisha Ghaus Pasha, Hassan Ali Chanhio Ali Jameel, and Arshad Zuberi.