Task force suggests farm income tax, GST on services

[Naveed Yaseen]

Asks president to improve trade ties with India, China

Sunday, July 12, 2009
By Mehtab Haider

ISLAMABAD: The Planning Commission’s Task Force on Private Sector Development on Saturday recommended to President Asif Ali Zardari to focus upon trade ties with China and India as well as broaden the tax net on agriculture income and GST on services sector.

“We are also recommending the government to take measures to improve electricity generation which is now hampering growth of the country,” the former World Bank economist, Shahid Javed Burki, who is currently holding Chairman of the Task Force while briefing reporters on Saturday.

Answering a query about boosting trade with neighbouring countries, he said that the gravity model of trade showed that Pakistan should focus its trade relations with China and India but currently USA is the largest trading partner of Pakistan.

He said when Bangladesh came into being in 1971 the textile quota was distributed between Pakistan and Bangladesh. “The Bangladesh continued to get incentives of 15 percent duty on supply of textile products owing to falling into the list of least developed countries, resulting into providing 15 percent duty reduction on its exports thus Pakistan cannot compete them.”

To another query about private sector development at a time of hour long load shedding, he said that the task force recommended certain measures to improve it. However, he blamed the Musharraf-Aziz regime for showing negligence for not taking measures even to generate single megawatt despite his repeated reminders to them when they were at the helm of the affairs.

The industrial sector, he said, demanded the government for providing level playing field to them by rationalizing taxes.

The private sector members in the task force pointed out that taxation was limited in many sectors and it was almost negligible on the agriculture sector.

“Besides the industries were facing serious problems in the country including power outages,” said Burki adding that a study conducted by Institute of Policy Development showed that the economic loss accounted to around 4 percent of GDP due to power shortages.

He said as the tax base has not been broadened the country was facing revenue losses and the manufacturing sector was being over burdened due to heavy taxes.

The business tycoons who exist in the fold of the task force pointed out that due to high cost of doing business they were being rendered uncompetitive at the international level.

The task force has recommended that country needed to diversify the export base to the changing dynamics.

“China was now a very large auto manufacturer and a big consumer society and our vendor industry and other supporting sectors can exports parts to these industries,” he added.

The task force has also recommended that the government announce tax incentives to industries providing on job training for the up-gradation of workforce.

The task force is also suggesting the incumbent regime to provide tax incentives to those industries, which are taking steps to improve human resource development.

http://www.thenews.com.pk/daily_detail.asp?id=187558