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Govt decides to involve provinces in budget making - Lahore_Real_Estate - 04-08-2011 01:06 PM
* Economic Advisory Council decides to include income based tax on agriculture in budget proposals
ISLAMABAD: Economic Advisory Council (EAC), the highest economic consultative forum of the federal government, here on Thursday decided to include all four provinces in the federal budget-making process in order to broaden ownership of the economic decisions.
A meeting of the EAC, which was held under the chairmanship of Minister for Finance and Revenue, Dr Abdul Hafeez Shaikh, also decided that meetings of the EAC would also be held in all four provincial capitals of the country.
Instead of existing land based agriculture income tax, EAC decided that a proposal for income based tax on agriculture sector would be finalised and included in the budget proposals 2011-12.
While fully supporting the imposition of reformed general sales tax (RGST) on goods and services, economic experts say that every income group should be taxed and EAC decided that a formal proposal on imposing tax on agriculture income be prepared and presented in the next meeting of the council.
Official sources informed that EAC discussed important proposals, including creation of a holding company of a transitional nature to undertake restructuring of the eight loss making public sector entities (PSEs).
The holding company is to be led by a credible independent board of directors free from political intervention.
Keeping in view the enhanced role of provinces in the economy following the NFC Award and the introduction of the 18th Amendment, EAC was advised to also include provinces in the federal budget making process and ensure greater involvement of the provincial governments in the economic policy making.
EAC also recommended to the government to undertake economic reforms, especially tax reforms, as the country needs more revenues to meet its obligations of development.
It was decided that national austerity plan would be upgraded and placed before the prime minister for formal approval so that available financial resources could be utlised in a disciplined manner.
It was decided that Planning Commission (PC) would draw up a framework to operationalise the conceptual framework of growth strategy for EAC and subsequent implementation by government.
The meeting also discussed revenue efforts of the federal government and members of the committee were of the view that despite imposition of Rs 53 billion new taxes, revenue target of the federal government would not be met.
EAC was of the view that although the FBR was faced with huge shortfall in revenues no further tax should be imposed during the ongoing fiscal year.
EAC was informed that new economic growth strategy would enable the government to present growth-oriented budget that would help create new jobs in the private sector and in the long run it would have a positive impact on employment and reduction in poverty. The finance minister highly appreciated the valuable contribution of all the EAC members, especially Dr Hafeez A Pasha and Shaukat Tarin. He assured all-out support to the EAC for its future work.