ISLAMABAD – The government on Tuesday announced the imposition of one time surcharge of 15 percent on income tax payable for the remaining period of current fiscal, with an immediate effect from March 15.
A statement issued by the Finance Ministry on Tuesday said that the government had increased special excise duty from one percent to 2.5 percent and withdrew 17 percent general sales tax exemptions on fertilizers, pesticides and tractors. The government also announced an end to zero rating on plant, machinery and equipment and parts while restricting the zero-rating on the export of textiles, carpets, leather, sporting and surgical goods only to registered manufacturers and exporters.
The distortion on the assessable value of sugar artificially limited at Rs 28.88 per kilogramme has been removed with the current ex-factory price to be prescribed price for the levy of sales tax. However, to protect consumers, a special rate of eight percent for levy of sales tax on sugar has been retained instead of the 17 percent. The government also announced expenditure control measures, imposing a complete ban on fresh recruitments, surrender of budgetary allocations beyond last year’s level, reducing by half POL entitlements, purchase of stationary and travelling allowances, and a complete ban on purchase of durable goods.
The combined impact of these measures would be Rs 120 billion and the revenue measures would help achieve revenue target of Rs 1,604 billion during the current fiscal year. It said the government was committed to stabilising the economy and pursuing its reforms agenda despite the shocks caused by unprecedented floods and rising oil prices. The government would reign in the fiscal deficit under 5.5 percent of the GDP which some observers predicted to cross eight percent of the GDP.
The recourse to the State Bank of Pakistan borrowing has been aggressively managed and borrowing stood at Rs 68 billion on February 28, 2011 from Rs 321 billion during the first half of the current fiscal year. The inflation has registered a decline in the last two months and CPI inflation was down to 12.9 percent from 15.7 percent recorded in December.
Ordinances: President Asif Ali Zardari promulgated three ordinances, which allowed the government to impose new taxes. These issued ordinances would come in force at once and taxes imposed through these ordinances would stand imposed on taxpayers of the country with immediate effect, the ordinances said.
The president promulgated Income Tax (Amendment) Ordinance 2011 and empowered the government to levy 15 percent surcharge on the payable tax of all income taxpayers in the country. The 15 percent income tax surcharge would remain applicable on incomes from March 15 to June 30, 2011.
Special Excise Duty: President promulgated Federal Excise (Amendment) Ordinance 2011 and empowered the federal government to increase the rate of special excise duty on all notified imports and locally-produced items subject to federal excise duty.
2pc surcharge on power tariff
ISLAMABAD – The government notified the imposition of a 2 percent surcharge on the power tariff on Tuesday with immediate effect. The surcharge was finalised after a meeting of the ministries of law and water and power, an official source said, adding that a similar surcharge would be imposed in April and May.
The government has opted to impose the surcharge because it had already passed on the complete determined tariff by the National Electric Power Regulatory Authority, so the differential could be only made up by imposing the surcharge. Usually the national tariff is based on the tariff determined for the Islamabad Electricity Supply Company (IESCO), which is the most efficient, having the lowest line-losses of seven percent.
The government, said the source, maintained a uniform tariff because otherwise the tariff of inefficient DISCOs in other provinces would be much higher than the ones in Punjab, which could result in political backlash. Staff Report
