A SNAP SHOT OF BUDGET PRIORITIES
June 04 - 10, 2007
The major objectives of Federal Budget have been:
* To provide relief to the fixed income group as well as to the common man.
* To create Employment Opportunities
* To Promote investment & Growth
* To Broaden the Tax Net
* To strengthen the Country's Physical Infrastructure
* To improve Social Indicators
* To improve the Productivity of the Industrial sector.
RELIEF TO THE COMMON MAN
1. The minimum wage rate should be enhanced to Rs. 5,000.
2. Price Controlling mechanism of developed countries such as Monaco should be introduced.
3. The Health care facilities should be updated.
4. The salary structure of Government employees should be modernized in the light of market basis.
5. Education sector reforms be implemented practically.
1. Industrial Reorganization
2. Creating Skill improvement centers at District levels
3. In the light of WTO Service sharing agreements a protection to the professions including Accountants is required from the federal Level as well.
Our Agriculture sector is contributing 26% towards national income (GDP) and around 43 % in work force employment where as 66% of the rural population is attached with this profession.
There is a WTO quota being involved in our agriculture sector as well as a CBR proposal of imposing enhanced taxation on the agriculture sector is a point of great concern.
For the promotion of agriculture in the agro based country like Pakistan there is a need to subsidies the agriculture sector at large.
Following are the proposals:
1. WTO quota & enhanced Taxation should not be involved to enhance agricultural growth.
2. Income tax incentives on exports of processed (value-added) fruit / food.
3. Tax credit on agricultural research.
4. Reduction /exemption on duties, sales tax and income tax on imports and other local purchases undertaken to support the development / growth of the Agricultural sector, for example, tools, machinery, seeds, fertilizer, etc.
5. Facilitating the basic facilities required for efficient crop cultivation.
6. Announcement of further incentives on achievement of, or exceeding a prescribed standard of output / yield per acre.
Textile sector is a major contribution to GDP is 9% where as it covers 60% exports of Pakistan. This is the sector that requires special attention.
Following are the Proposals for its improvement:
1. Subsidies in power costs for export oriented units.
2. Tax credit on marketing costs and other expenses directly related to export sales.
3. Setting up of a department in the EPB in order to amicably resolve issues relating to the anti-dumping provisions.
TOURISM & HOTEL INDUSTRY
Pakistan is a country of natural hill points & tourist attraction but unfortunately this important sector is neglected so far.
Following are the proposals for its betterment:
1. Tourist packages may be introduced as even celebrating a year of tourism there are hardly one or two packages on PTDC website.
2. Special incentives should be provided to the Hotels & Resorts in the newly established hill points as there is a market for jobs if taken it on higher standards.
3. PTDC along with provincial concerns like TDCP & others should be given many attractions & incentives to uplift this neglected sector.
Inspite of having the biggest canal system Pakistan is still dependent on rains and natural climates which are causing a hindrance in the agricultural promotion of Pakistan.
Following are the Proposals:
1. The Canal system Reforms should be channalised and monitored at provincial and Federal Level.
2. The Barrages & reservoirs should be upgraded and construction of new Reservoirs like Khanki, Jinnah, Islam Barrage is the utmost requirement of the time.
3. The Rehabilitation & modernization phase should also be upgraded accordingly.
Electricity supply is the basic need of the country where since the creation of Pakistan we are facing the shortage of Electricity as well as the transmission system of electricity is outdated.
Following are the Proposals:
1. National Consensus on the feasible Dams and feasibility studies on the new Dams can be the ultimate solution of this electric shortage. Federal Government will have to take bold steps for the Budget Allocation of these projects.
2. There is need to strengthen the Power sector through increased portion of PSDP budget allocation to possible increase in the Electric generation sources.
3. The Income Tax of the Distribution companies may be exempt from Tax because in case of Loss the Turnover Tax or the Income Tax is indirectly shifted to the general consumer.
4. The previous system of Sales Tax on collection basis may prove a relief to the general public as the Billing system is also creating a further burdon on the consumers that are paying their due share of bill.
1. The Tax on salaries should be rationalized. The procedure being followed will lead to regressive taxation at the end. Basic Exemption may be extended from 150,000 to 200,000. Thus it will provide a relief to the low salaried income group.
2. Further instead of a complicated salary taxation rates a uniform procedure may be followed to streamline the system of Tax calculation. i.e
Tax on Total income of Rs. 200,000 is 10%
Tax on Total Income of Rs. 400,000 is 15%
3. Capital Gains should not be any exemption on capital Gains and its subsequent adjustment as per IAS 39.
4. To safe guard the Environment from pollution affect all the pollution inflating items like polythene should be taxed.
5. Turnover Tax in case of loss of Power Distribution companies may not be charged because it will eventually shift to the consumers of electricity.
Following amendments are proposed for Sales Tax Act:
1. Section 8(A)"Jointly & severely liability of registered person in supply chain where Sales Tax unpaid" requires amendment in a sense that it creates an ambiguity and thus a person making taxable supplies remains in danger even after paying its due tax in time . If at later stage the seller does not pays tax then the purchaser who principally has paid tax should not be accountable.
2. Section 8(1)(a) requires a clarification regarding the Input Tax credit on businesses activities. Whereas the changes are being done in SRO 490 should be incorporated in act accordingly. Whereas, the vehicles if used for Business should be admissible activity for claiming input Tax claim.
3. There is a need to redefine time of supply under section 2(44) as it is not in line with international accounting standards. Advance receipt of money does not mean sales.
Property Tax system requires a proper valuation, assessment and collection. It is proposed that instead of annual Property Tax collection (that becomes an undue burdon), property tax may be collected monthly in the shape of tax appearing in monthly electricity Bill (as being done for television).
Further more people in urban areas who are renting their property may be given a relief as they are assisting many homeless people and thus contributing towards reduction in housing problems in Pakistan.