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Introduction of wealth tax under consideration - Lahore_Real_Estate - 04-08-2011 12:56 PM
ISLAMABAD: The government is learnt to have formed a high-level committee to work out details for reintroduction of wealth tax in the next budget to increase revenue. The committee, headed by renowned economist Dr Hafeez Pasha who heads the Advisory Committee on Revenue, has been asked to complete its work in three weeks and submit its report to the finance ministry for further consultations.
The tax introduced in 1969 was scrapped in 2002 by the Musharraf government. Economic experts said the wealth tax had been abolished because of strong resistance from big real estate owners, including military personnel.
According to an official, the committee will determine if the reintroduction of wealth tax is feasible. It would also help the tax department to find out taxpayers who concealed their assets, he said.
Analysts believe the government is taking the initiative because of pressures from donor countries and lending agencies. Even the International Monetary Fund has supported the government move to tax the rich. Former income tax member Vakil Ahmad Khan told Dawn on Wednesday that he was in favour of wealth tax. But, he said, it should not be imposed on business or any other assets which were already subject to income tax.
He said that a rented house already under income tax should not be required to pay wealth tax. But a plot of land, which is not yielding any taxable income, should be subject to wealth tax. He said the business capital should be exempted from the tax because it was yielding income, which is liable to income tax.
Before the abolition of wealth tax in 2002 it was charged at a rate of 2.5 per cent. At the same time, it was decided that assets which were liable to wealth tax should not be included in the Zakat payable list.
The best example is the real estate. After the abolition of wealth tax the assets should either be included in the Zakat payable list or wealth tax should be reintroduced.
The official said that reintroduction of the tax would at least help the tax department unearth the hidden wealth of rich people. “This will help us to broaden our tax base,” he added.
The Income Tax Ordinance 2001 empowers tax officials to access undeclared wealth.