Govt mulls levying flood surcharge

The surcharge will help to create an additional fiscal space to rebuild Pakistan's flood-battered infrastructure.


Shahbaz Rana August 14, 2010

ISLAMABAD: The government is contemplating levying special surcharge on all income groups and imports to generate Rs138 billion with a view to creating additional fiscal space to rebuild Pakistan’s flood-battered infrastructure.

Official sources told The Express Tribune that the government was considering levying a surcharge at a rate of 10 per cent of the payable tax. If the measure gets the green light, the levy will be applicable on all taxpayers and could be a one-off deduction for the current financial year.

The official said that the tax would be levied through promulgation of an ordinance. Any person having more than Rs300,000 income per annum, whether a government employee or a businessman, will be liable to pay the surcharge.

The government is also considering levying a special surcharge on all imports at the rate of 10 per cent of the payable tax, the official added.

The government is also carrying out another exercise to cut development and current expenditures, particularly subsidies and denying special bailout packages to Pakistan Railways and Steel Mills.

“The next week is crucial as the government is not only going to announce new revenue measures but is also set to take a final position on the reformed General Sales Tax issue,” said another key government functionary.

The government has been unable to resolve the issue of GST on services because of differences among the provinces and between the Centre and the provinces. The IMF has termed reformed GST “crucial” to generate additional revenue.

The government on Friday also tasked donors to complete the ‘Damage Need Assessment’ of the flood-ravaged areas by October 15, which would pave the way for launching of a multi-billion-dollar rehabilitation plan of over 14 million affected people and damaged infrastructure.

The decision was taken in a joint meeting of the country’s economic managers and international donors, including the UN, World Bank and the ADB.

The worst ever floods have inundated almost one-fifth of the country, affecting 14 million people and rendering 6 million homeless. The federal government has announced to get damage assessment done by creditworthy agencies.

The damaged areas stretch over 132,421 square kilometres. Over 650,000 houses have been damaged or destroyed by the floods. The joint teams of the World Bank and the Asian Development Bank will start validating the assessment.

The government also constituted a four-member committee headed by Deputy Chairman, Planning Commission. The panel will coordinate with the donors and prepare a roadmap for initiating the Damage Need Assessment and early recovery plan. The first meeting is be held on Monday.

The multilateral donors reiterated their commitments to help out Pakistan in times of crisis. The director-general of the Asian Development Bank is arriving in Pakistan next week to discuss avenues for further support. The World Bank representative intimated that $900 million funds have been reallocated towards flood relief assistance.

Finance Minister Dr Hafeez Shaikh emphasised the need to have better coordination among various organisations involved in relief and rescue effort. For the purpose of clarity joint reporting mechanism may be devised which would be shared with the public, government institutions and political leadership, he emphasised.

The resident coordinator from the UN briefed the minister on the steps taken by the UN towards flood relief. He informed the minister that an appeal for initial response has been launched for US $459 million. The appeal focused on four major sectors of food, healthcare, shelter and, water and sanitation. He also indicated that the appeal is being revised to include early recovery as well.

Published in The Express Tribune, August 14th, 2010.

COMMENTS (8)

Umer | 11 years ago | Reply They live in Palaces; they drive expensive cars; they eat imported chocolates; they shop in Harrods and they plunder billions of our Tax money. Their bellies will never be full, they will never be satisfied, their needs and greeds have no limits; they are our politicians!!! O Allah please please please save us from these blood sucking parasites!!!
Harris | 11 years ago | Reply I wish I could stop my company from deducting the Tax on my salary and giving it to these plunderers. No one trusts them, no one gave them any AID and now they want to extort our Middle class's money by leving more and more taxes. I wish I could just eliminate this sham democracy; this so called non sense democracy!!!
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