ICCI WANTS UNIFORM ‘NATIONAL ST’
Islamabad Chamber of Commerce and Industry (ICCI) President Khalid Iqbal Malik urged the government to implement a single national sales tax in a statement released on Friday. Malik said the move will help in streamlining the taxation system and improving tax revenue of the country. “Under the current sales tax regime, businesses have to pay multiple sales tax at federal and provincial levels due to which the cost of doing business has gone up,” he said, adding that the introduction of a unified sales tax structure will help in integrating the country’s economy and facilitating transfer of goods and services across the country.
He said the prime benefit of unified tax structure will be Pakistan becoming a common market where each product or service will be taxed similarly in all provinces and federal areas instead of multiple tax rates being applied.
“The move will create a level playing field for local companies in export markets,” he stated. ICCI Vice President Tahir Ayub said that introduction of a national sales tax regime will also facilitate faster growth in business activities by reducing compliance formalities including filing of tax returns with multiple provincial and federal authorities. “India has already implemented a single sales tax structure and Pakistan should also seriously consider it to facilitate the growth of economic activities and improve tax revenue of the country,” he added.
DISBURSEMENT OF AGRICULTURAL CREDIT EXCEEDS TARGET, STANDS AT RS704.5BLN
Surpassing the target, banks disbursed agricultural credit of Rs704.5 billion in fiscal year 2016-17 (FY17), up 17.8% compared to last year’s disbursement of Rs598.3 billion, according to data released by the State Bank of Pakistan (SBP). The Agricultural Credit Advisory Committee (ACAC) had set the target of Rs700 billion for FY17. Moreover, the agri outstanding portfolio increased to Rs406 billion by end of June, 2017 registering a hefty growth of 17.4% compared with the last year’s position of Rs346 billion. Similarly, the agricultural credit outreach has increased to 3.27 million farmers at end June 2017 from 2.40 million farmers last year. The achievement of agri credit disbursement target was an uphill task due to high risk perception of banks about agri financing and volatile prices of agri commodities etc. However, the SBP continued to implement its multi-pronged strategy for achievement of agri-credit target set by the government, which included; sensitising banks to adopt agri financing as a viable business line. This included exploring new financing products, value chain financing, warehouse receipts financing, digitalisation of credit, execution of credit guarantee scheme for small and marginalised farmers, and inclusion of microfinance institutions/rural support programs for catering the credit needs of marginalised farmers. Further, monitoring efforts included rigorous follow-up with the top management of banks and agri credit heads and holding of regular follow-up meetings with regional management. Conducting farmers’ awareness and financial literacy programs at grass root level were also instrumental.
PRIVATE SECTOR’S ROLE CRUCIAL IN CPEC: BOI
The China-Pakistan Economic Corridor (CPEC) will spark development in trade and industry, which is the driving force behind economic growth and prosperity in the country, said the Board of Investment (BoI).
“The sustainability of the entire CPEC project depends on industrial cooperation, which is its main component,” commented BoI spokesman Shah Jahan Shah on Friday.
Speaking at a consultative session on CPEC challenges and opportunities held at the Karachi Chamber of Commerce and Industry (KCCI), he said the role of private sector was more crucial in the current phase of CPEC.
Shah was of the view that there was a lot of transparency and the government was committed to facilitating the private sector in its endeavours.
Finance ministry admits booking Rs64b as non-tax revenue in sales proceeds of power plants
The Ministry of Finance on Wednesday admitted that it booked Rs64 billion as non-tax revenue on account of sale proceeds of two power plants despite the fact the buyer company – Pakistan Development Fund Limited (PDFL) – exists only on paper.
“After conducting extensive negotiations with stakeholders, including with Ministry of Water & Power, the PDFL injected money in two projects and acquired shares worth Rs64 billion, which was paid to the federal government as non-tax receipts,” said Ministry of Finance.
The ministry issued this statement, which reported that the government double booked Rs64 billion of the PDFL to understate budget deficit for the fiscal year 2016-17 despite that the PDFL money had already been taken into account in previous fiscal year.
The story said the PDFL money had been booked in fiscal year 2014-15. In fact, it had been booked in 2013-14 as ‘statistical discrepancy’ that provided the due advantage to the government despite placing it under ‘foreign grants’.
In its response, the ministry said it was intimated for the information of the public that the PDFL had been incorporated as a Non-Banking Financial Institution with the objective of financing and investment in infrastructure projects.
The PDFL identified two power projects – Haveli Bahadur Shah and Balloki owned by the National Power Parks Management Company Limited (NPPMCL) – where it could make investments out of the funds available with it.
However, the ministry did not explain the process that it adopted to select the PDFL for selling stakes of these two power plants. The sale of the government assets is considered as divestment, which requires many steps including due diligence, selection of financial advisers, evaluators, calling bids and short-listing of prospective bidders.
The divestment is the subject of the Privatisation Commission but it had not been involved in this process, said the sources. Instead, the Finance Ministry moved a summary to the federal government, seeking its permission to sell these power plants to the PDFL.
The purpose of the summary was to replace a portion of Rs114 billion Cash Development Loans given for two power projects’ construction. The debt had been acquired at Kibor plus 3% interest rate and the ministry offered to replace it with Kibor plus 2.75% by availing the PDFL money on the pretext it will reduce tariff. In return, the ministry offered the equity stakes of these two power plants to the PDFL.
The summary was subsequently sent to the Ministry of Water and Power for ‘comments’ that asked to seek resolutions of the two boards – the PDFL Board and the NPPMCL Board, said the sources.
Moreover, the government has not yet hired a full-time chief executive officer of the PDFL, as the secretary finance serves as its interim CEO. The finance minister is the chairman of the board.
The PDFL does not have an office and it has not yet recruited staff. This raises question who decided to use the PDFL funds when everything is at initial stage of establishment.
While setting up the PDFL, the government had announced that it would ensure development of infrastructure in the country. However, in case of acquisition of the two power plants, no additional investment was made. Only the ownership of the plants was changed from the NPPMCL to the PDFL.
This showed that the only purpose of this transaction was to understate the budget deficit by taking into an amount that had already been booked, as from the financing side the deficit was close to 6.3% of GDP. But the Finance Division spokesman has expressed indignation and concern over the news report.
The spokesman for the Finance Ministry said Rs64 billion “amount was never taken as government revenue receipt but was a foreign grant and placed under external financing”.
He further said: “This was booked as expense of federal government as grant-in-aid to Pakistan Development Fund Limited (PDFL) during the 2013-14”.
What the Finance Ministry did not explain was that in fiscal year 2013-14 accounts, it showed huge ‘statistical discrepancy’ of Rs215 billion that included Rs157 billion of Saudi Arabian gift, which it subsequently parked in the PDFL.
GOVERNMENT PLANS TO USE TECH TO CHECK ALCOHOL SALE
To keep a check on the illegal sale of alcoholic beverages, the Excise Taxation and Narcotic Control Department (ETNCD) has proposed the establishment of an online system to monitor breweries, distilleries and wine shops. The PC-I of the project, titled Smart Monitoring and Regulation of Distilleries and Breweries, is with the planning and development department for approval. It is being set up at a cost of around Rs60 million and the aim is to monitor every aspect, from production
to sale, of alcoholic beverages.
According to the source, smart monitoring and regulation would minimise the misuse of alcoholic spirits that can cause disabilities and fatalities among the users.
The document stated that for the moment, relevant entities in businesses are granted licences to produce ethanol, and the entire process is done manually. All such forms and licences are granted for sale and purchase of these chemicals and raw materials which are directly controlled by the excise department.
It added that through this current process, they cannot control duplication and forgery of receipts.
There is no backward traceability to the source and since monitoring of all distilleries, breweries and wine shops is manual, it may be resulting in revenue loss.
The project proposes to establish an online application and a real time monitoring system. The online application system would keep track of the entire process, from production to sale, of alcoholic beverages.
Under the new system, smart monitoring centres have been proposed at regional offices and headquarters of the excise department, intended to ensure that nothing bypasses the online application system.
NEELUM-JHELUM PROJECT: FIRST UNIT TO START ENERGY PRODUCTION BY FEB 2018
The strategically important Neelum-Jhelum hydroelectric power project is fast heading towards completion and is scheduled to start electricity generation with the commissioning of the first production unit by February 2018. The project’s board of management briefed Water and Power Development Authority (Wapda) Chairman Lieutenant General (Retired) Muzammil Hussain about the progress during a meeting. Board Chairman Peter Mason and its members attended the meeting, says a statement issued on Friday. Speaking on the occasion, the Wapda chairman expressed satisfaction over the progress on the hydroelectric power project, adding despite the delay of years and cost overrun, the project would finally see the light of the day because of extraordinary commitment and professional excellence on the part of Wapda and project team members. He directed the project management that the pace of work should continue with the same zeal in order to complete the project in accordance with the timeline. Earlier, the meeting was briefed that the filling of water in the project reservoir would start in October, the waterway system under which tunnels would divert water from the dam to the power house would be completed by the end of December, pressurising of the waterway system would start in January 2018 while wet testing and commissioning of power generating units would commence in February 2018.
IN PM’S ABSENCE, DECISION TO CUT PETROLEUM RATES IN LIMBO
Oil consumers could get reasonable relief at the start of next month as the industry regulator has proposed a reduction of up to 6.3% in prices of petroleum products, taking cue from the global market trend.
The price cut has been recommended for major petroleum products – petrol and diesel – that are mostly consumed in Pakistan. However, the regulator has proposed an increase of up to 29.5% in prices of kerosene oil and light diesel oil.
The recommendation comes at a time when the prime minister has resigned following disqualification by the Supreme Court for failing to prove the money trail that led to the purchase of four luxurious apartments in London. Final approval for the oil price revision is given by the prime minister.
However, the government is likely to keep petroleum product prices unchanged as the prime minister has stepped down. In the absence of the premier, there seems to be no competent authority to decide on the price revision.
In a summary prepared and sent by the Oil and Gas Regulatory Authority (Ogra) to the ministries of petroleum and finance on Friday, it has been proposed that petrol and diesel should be somewhat cheaper from the beginning of August.
“The finance ministry will support only a partial price reduction in an effort to make up for the revision in taxes made by the government over time,” an official commented.
According to the Ogra summary, high-speed diesel, which is mostly consumed in transport vehicles and the agriculture sector, should be cheaper by Rs5.07, or 6.3%, per litre. This will take its price down to Rs74.83 per litre from the existing Rs79.90.
Apart from farmers and transporters, the price cut could have a favourable impact on the rate of inflation in the country. “If the government is able to force the transporters to cut down their fares, it will bring down the inflation rate,” the official said.
Petrol price is likely to come down by Rs3.67, or 5.1%, to Rs67.63 per litre compared to the current price of Rs71.30 per litre.
At present, compressed natural gas (CNG) is not available in several parts of Punjab and imported gas is being used by the consumers. A reduction in the petrol price will provide some relief to the motorists.
Ogra has recommended an increase of Rs13, or 29.5%, in the price of kerosene oil, which is used for cooking purposes in remote areas where liquefied petroleum gas (LPG) is not easily available. Its price will go up to Rs57 per litre against the existing Rs44.
The price of light diesel oil, consumed mainly by industrial units, may be increased by Rs10.01, or 22.8%, per litre, and it will reach Rs54.01 per litre compared to the current Rs44 per litre.