Bringing agri sector into tax net inevitable: Tareen

* Says resource mobilisation can yield Rs 700 billion in revenue

By Moonis Ahmed

KARACHI: Former Finance Minister Shaukat Tareen has declared that without bringing agriculture sector into the tax net revenue resources cannot be increased and the government should levy tax on agriculture without further delay.

Addressing a gathering of Korangi Association of Trade and Industry (KATI) Tuesday, he said that agriculture tax does not mean tax on poor farmers but it should be imposed on farmers having income over Rs 200,000 per annum as levied on other sectors.

Tareen supported the stance of trade and industry on the value-added tax (VAT) and said that if the business community demands it should be enforced gradually in one or two years' time.

He informed that he had given a plan for restructuring public sector units as the losses by the public sector units have reached Rs 250 billion and this should be plugged. He said that despite immense pressure from the foreign donor agencies to increase the interest rates, he did not do it but instead he was instrumental to lower the interest rates.

He said that he only agreed to increase 3.5 percent core interest rates as against 5 percent demanded by the International Monetary Fund (IMF) and that too done gradually during his tenure. He said that revenue could be increased by Rs 700 billion by enhancing resources mobilisation and enlarging the tax net.

He said that imposition of Capital Value Tax (CVT) on real estate was wrong but it was only imposed in the absence of the National Finance Commission (NFC) Award, however, after the announcement of the NFC Award it is prerogative of provinces to whether impose CVT or not. He agreed that capital gains tax (CGT) should be levied on stock markets in the forthcoming budget.

He said that fire-fighting or dependence on 'Man-o-Salwa' (dependence on foreign loans) can not guarantee good governance and we should go for resources' generation for economic sovereignty.

KATI's Standing Committee on Finance Chairman Mian Zahid Husain demanded of the government to enforce VAT system gradually in two years in order to save trade and industry and the country's ailing economy.

KATI Patron-in-Chief S M Muneer demanded to revert the decision of two days weekly holidays as the economy is suffering badly. "Due to unnecessary closure of port and customs offices exporters and importers have to pay millions of rupees in demurrage while the country is losing huge money as revenue," Muneer said, adding that Pakistan is a country which can not afford two weekly offs.

He further lamented the lethargy in government offices. "The officers in government functionaries always come late and leave early and this tendency of coming late even prevails in prime minister, governors, chief ministers and ministers as well." He advised the government to strictly observe timing in order to bring discipline into the system.

Senator Abdul Haseeb Khan said that the industry's input has not been taken into preparation of the federal budget 2010-11 and the business community has certain reservations in this regard. He asked Tareen to explain the circumstances under which he had to resign from his post as the finance minister.

Earlier, KATI Chairman Razzak Hashim Paracha said in his welcome address that the government should now have a sense of direction and take corrective measures to rescue the ailing economy. He said that the government without tilting to the IMF and World Bank should not enforce CVT in a haphazard way. He said that the trade and industry would welcome VAT if it was levied gradually and by taking businessmen into confidence.