EAC for taxing all incomes

The Economic Advisory Council (EAC) on Thursday came up with a suggestion to tax all incomes, irrespective of the source of origin, including agriculture and service sector, in the coming budget 2011-12.
Federal Minister for Finance and Revenue Abdul Hafeez Sheikh chaired the meeting of the EAC that overviewed the economic situation of the country, including the performance of key sectors of the economy, and also discussed the proposals for the upcoming budget for the fiscal year 2011-12.

The EAC meeting also agreed that the Austerity Plan and the Governance Plan, already approved by the EAC and the Cabinet, should be implemented in letter and spirit. Meanwhile, it was also agreed that the EAC will interact with all the stakeholders for the budget-making process.

The EAC also discussed the important proposals, including giving impetus to the Public Sector Enterprise (PSE) reforms through creation of a holding company of a transitional nature to undertake restructuring of the eight existing PSEs and also include several other large PSEs in its ambit. The holding company will be led by a credible Board of Directors.

The Federal Board of Revenue (FBR) gave a detailed presentation on the revenue collection performance for the first nine months (July-March) of the ongoing financial year 2010-11, saying it collected Rs 1012 billion in the period in question.

Sources were of the view that some EAC members showed concerns over the performance of the Tax Department during the period in question of the ongoing fiscal year, and they feared that the FBR might not be able to achieve the revenue collection target of Rs 1,604 billion by June 30.

However, the FBR highlighted the recent measures undertaken to achieve the revenue target. The presentation also outlined an enforcement plan, risk-based audit, broadening of the tax base and successful implementation of the fully-automated refund system. The FBR hoped that with these measures, they could achieve the annual tax collection target of Rs 1,604 billion.

The Planning Commission presented the government’s new growth strategy based on improving productivity, governance and market reforms, urban management, connectivity and youth empowerment. The EAC agreed to reform the Planning Commission for strengthening its role in the planning process. It was also decided that the Planning Commission would draw out a plan to operationalise the conceptual framework of growth strategy for the EAC and its subsequent implementation by the government.

Meanwhile, the EAC also set up working groups to formulate recommendations in key areas like governance, energy, trade, taxation, capital markets, banking and agriculture among others.

The meeting was attended by Dr Hafiz A Pasha, Convener EAC, Shaukat Tarin, former finance minister, the Deputy Chairman Planning Commission, the Minister of State for Finance and Economic Affairs, the Governor State Bank of Pakistan, senior officials and members of the EAC, including Dr Ijaz Nabi, Jahangir Khan Tarin, Salim Raza, Farooq Rahmatullah, Ali Habib, Nasim Beg, Shahnaz Wazir Ali, Farid Rehman, Hassan Ali Chaniho and Arshad Zuberi.