Delay in consensus will not block tax reforms: Shaikh
Finance Minister stresses need for immediate tax reforms in the country.
KARACHI:
The government cannot spend a lifetime on developing consensus for tax reforms, according to finance minister Hafeez Shaikh. Addressing the launching ceremony of Margin Trading System (MTS) at the Karachi Stock Exchange (KSE) on Saturday, he stressed the need for immediate tax reforms in the country and highlighted that all political allies of the government have to be taken on board in making policy decisions.
However, in a show of urgency, he added, “If this process takes too long, the government has other options for widening the tax base.”
While the finance minister did not confirm whether the Federal Board of Revenue (FBR) may issue statutory regulatory orders to remove exemptions granted to various sectors, he stressed, “The main points are that tax collection has to be improved, and generalised subsidies must be removed.”
“The proposal for reformed general sales tax has been approved by the standing committee of the Senate, and is now awaiting the approval of the standing committee of the National Assembly, after which it may be tabled in the Parliament,” said Shaikh, recapping the progress of sales tax reforms being pursued by the government.
Urging legislators to take practical steps for reducing national debt, the finance minister said, “We must not allow politics to defeat economics, or partisanship to defeat national interest.”
“The government is trying to limit the fiscal deficit at five per cent of the gross domestic product (GDP),” said Shaikh. However, he added that the government may not succeed in meeting this target since flood losses had jeopardised and reduced the target by two per cent.
Shaikh also drew attention to the positive developments in the economy that have taken place since the long, difficult and costly political transition that preceded the current government. He pointed out that the country’s exports will top $22 billion this year while remittances are expected to touch $11 billion in the current fiscal year.
He termed the launch of MTS as a milestone for the local equity markets and the country. Expressing hope, he said, “This long overdue introduction will bring greater volumes of trade and give confidence to more players to enter markets.”
Stressing the importance of a broader retail investor base, the finance minister assured that the government will facilitate the business communities and private sector as much as possible to create conducive environment for business.
He also said that government is considering stock issues of public sector companies, adding that these would be carried out through the three stock exchanges of the country.
KSE Managing Director Haroon Askari requested Shaikh to help expedite the implementation of changes in laws relating to capital gains tax. “Please help ensure that the submissions of stakeholders are incorporated into law prior to the commencement of operations of the MTS on March 14,” said Askari.
Elaborating on the newly-inaugurated MTS software, he said, “Kibor plus eight per cent will provide good returns to financiers, while multiple risk management tools that are built-in will provide confidence to investors.”
He also pointed out that the daily mark to market losses will be collected from borrowers, while financial charges will be calculated on adjusted financing so that borrowers, who have paid off a portion of their borrowings, are not charged on the entire amount borrowed initially.
He also expressed hope that banks and other financial institutions will participate actively through the newly-introduced margin trading system.
Published in The Express Tribune, March 6th, 2011.
The government cannot spend a lifetime on developing consensus for tax reforms, according to finance minister Hafeez Shaikh. Addressing the launching ceremony of Margin Trading System (MTS) at the Karachi Stock Exchange (KSE) on Saturday, he stressed the need for immediate tax reforms in the country and highlighted that all political allies of the government have to be taken on board in making policy decisions.
However, in a show of urgency, he added, “If this process takes too long, the government has other options for widening the tax base.”
While the finance minister did not confirm whether the Federal Board of Revenue (FBR) may issue statutory regulatory orders to remove exemptions granted to various sectors, he stressed, “The main points are that tax collection has to be improved, and generalised subsidies must be removed.”
“The proposal for reformed general sales tax has been approved by the standing committee of the Senate, and is now awaiting the approval of the standing committee of the National Assembly, after which it may be tabled in the Parliament,” said Shaikh, recapping the progress of sales tax reforms being pursued by the government.
Urging legislators to take practical steps for reducing national debt, the finance minister said, “We must not allow politics to defeat economics, or partisanship to defeat national interest.”
“The government is trying to limit the fiscal deficit at five per cent of the gross domestic product (GDP),” said Shaikh. However, he added that the government may not succeed in meeting this target since flood losses had jeopardised and reduced the target by two per cent.
Shaikh also drew attention to the positive developments in the economy that have taken place since the long, difficult and costly political transition that preceded the current government. He pointed out that the country’s exports will top $22 billion this year while remittances are expected to touch $11 billion in the current fiscal year.
He termed the launch of MTS as a milestone for the local equity markets and the country. Expressing hope, he said, “This long overdue introduction will bring greater volumes of trade and give confidence to more players to enter markets.”
Stressing the importance of a broader retail investor base, the finance minister assured that the government will facilitate the business communities and private sector as much as possible to create conducive environment for business.
He also said that government is considering stock issues of public sector companies, adding that these would be carried out through the three stock exchanges of the country.
KSE Managing Director Haroon Askari requested Shaikh to help expedite the implementation of changes in laws relating to capital gains tax. “Please help ensure that the submissions of stakeholders are incorporated into law prior to the commencement of operations of the MTS on March 14,” said Askari.
Elaborating on the newly-inaugurated MTS software, he said, “Kibor plus eight per cent will provide good returns to financiers, while multiple risk management tools that are built-in will provide confidence to investors.”
He also pointed out that the daily mark to market losses will be collected from borrowers, while financial charges will be calculated on adjusted financing so that borrowers, who have paid off a portion of their borrowings, are not charged on the entire amount borrowed initially.
He also expressed hope that banks and other financial institutions will participate actively through the newly-introduced margin trading system.
Published in The Express Tribune, March 6th, 2011.