Exemptions to go:Reformed GST to be enforced from Oct1

[Lahore_Real_Estate]

ISLAMABAD: Federal Finance Minister Dr Hafeez Shaikh announced here on Thursday that the reformed General Sales Tax (GST) would be enforced from Oct 1.

Talking to newsmen, Dr Shaikh said that the government intends to introduce GST in its original format, eliminating all exemptions.

The original form of GST has been distorted by exemptions, and the lobby which has benefited from exemptions is opposing restoration of GST to its original form, he said.

GST already exists in Pakistan; however it would be transformed through reformed GST, capturing the features of a VAT, enabling the government to start raising tax revenues required for a sustainable growth.

Pakistan, Dr Shaikh said has the lowest tax-to-GDP ratio in the world, with only nine per cent.

The decision of the government to introduce GST has now buried the issue of VAT which became controversial following differences between the federal and provincial governments on modalities of VAT.

Politically, it was easier for economic managers to include substantive features of VAT to make reformed GST broad-based, reduce exemptions and input crediting.

The government would now withdraw the five VAT bills submitted to the national and provincial assemblies.

Dr Hafeez Shaikh said that the ministry of finance was currently working on formulating new taxes with the objective of taxing the affluent class.

“Country’s financial situation was not good before floods, but worsened after the devastation caused by floods,” he said.

The ministry of finance is to re-evaluate the macroeconomic framework once the damage / needs assessment is completed, and a revised budget would be submitted to the federal cabinet and presented to the National Assembly and Senate standing committees on finance and revenue.

The government does not want to get loans from international financial institutions but wants to protect economy.

“The affluent class must show generosity and think selflessly and sincerely. There is no tradition in this country to pay taxes by the elite,” Dr Shaikh said.

The finance minister disagreed with newsmen on use of term ‘mini-budget’ or ‘financial emergency’.

Responding to questions about financial crisis of universities, the finance minister said that education is the biggest responsibility of the government, and there is no cut in the budget of public sector universities.

The government has already increased the budget by eight per cent.

“Though there is a freeze on current expenditures, all projects completed by 80 to 90 per cent would be allowed to be completed.”