Bracing up for value added tax, other financial hiccups

By Afzal Hussain Bokhari

The common people have been staging protest demonstrations on streets against frequent power breakdowns while the National Electric Power Regulatory Authority (Nepra) has given the approving nod to power distributing companies to raise the power tariffs by 77 percent as fuel adjustment charges.

Nepra notification says that consumers will have to bear 20 percent raise which is to be enforced from April. A 57-paisa hike was approved in March but under the new adjustment 77-paisa raise has been approved for April. Since much of the agricultural and industrial production depends on electricity, therefore, the raise in power tariff will most likely have a spiralling effect and it will not be restricted just to electricity.

Personally the raise might not affect him very greatly but in a political statement chief of his own faction of PPP, Major (Retd) Aftab Ahmad Khan Sherpao said that in Khyber-Pukhtunkhwa the production of a unit of hydro-electric power normally cost Rs1.10 but the same unit was being sold back to the people of the province for nine rupees.

He added that Khyber-Pukhtunkhwa was providing electricity to whole of the country but all the same it was being subjected to the maximum of load-shedding. In a statement, he demanded of the federal government to declare Khyber-Pukhtunkhwa an exception as far as load-shedding and raise in power tariff were concerned.

Unnerving indeed were the observations of the prime minister's adviser on financial affairs, Dr Hafeez Sheikh, who has recently been elected as Senator so that he could be elevated to the status of a full-fledged federal minister who should thus be able to present the national budget for the fiscal 2010-11. Speaking in a pre-budget seminar in Islamabad, he said that there might well be a delay of a month or two but the government intended to impose Value Added Tax (VAT) from July 1.

Flaying the opponents of the move, he said that actually they were not opposed to the imposition of VAT itself but they felt scared of the process of documentation for which they were using small traders as a shield. Dr Sheikh denied that the government had devised any 'B' plan to serve as an alternative to VAT. Defending International Monetary Fund (IMF), he said that the world body did not force any nation into accepting loans; it was one's own choice to fall back on IMF or to bear the expenditures by reducing the PSDP to zero.

He expressed amazement over the fact that the rate of General Sales Tax (GST) stood between 16 and 25 percent at the moment but the traders did not object to it. The government was trying to bring it down to 15 percent and the traders were raising a hue and cry over it. He said that the traders were aware of the fact that VAT involved documentation in which the government had the means to know of the traders who had a turnover exceeding Rs7.5 million (the limit after which VAT could be imposed).

In that case the government could ask about the income tax which unnerved some traders. He said that if Pakistan did not want to go to the IMF for help, it would have to pester its State Bank by asking it to keep printing currency notes, whatever the consequences. The other way out is to enhance taxes to the extent where we do not have to go from country to country with the begging bowl. He said that the forthcoming budget would be the first in the country's history which, in the light of the National Finance Commission Award, gave maximum powers and resources to provinces. In future, the release of funds to provinces on quarterly basis would take place on automatic basis.

Whether or not the proposals get okayed but speaking on the occasion, chairman of the revenue advisory council and former finance minister, Dr Hafeez A Pasha, claimed that he had given the proposals to exempt education and health sectors from taxes, do away with import duty on tea and enhance the limit of non-taxable income of the salaried class. He said that the tax net should be widened in the country without over-burdening the downtrodden and the less privileged people.

Predictions being predictions, the audience did not mind getting into the euphoria when chairman of the Federal Board of Revenue (FBR), Sohail Ahmad, sounded an optimistic note by saying that VAT would not lead to any price hike. Former advisor of finance ministry Dr Ashfaq Hassan Khan was of the opinion that instead of giving a growth-oriented budget, the government should aim at strengthening the economy.           

One may wind up the piece by juxtaposing the economic strength with human weakness. A well-attended Mehfil-i-Quran Khwani followed by a 'Majlis-i-Aza' was held on Sunday evening at the Imambargah Maulana Safdar Hussain al-Mashadi at Dhakki Munawar Shah in Ander Shehr in order to offer 'Fateha' for al-Mashadi's eldest son Maulana Kazim, who died of a heart attack in Karachi last week.

After studying various branches of religion from known institutions of the holy city of Qom such as Hauza-i-Ilmiya, Madrassah-i-Faiziya and Madrassah-i-Hujjatiya, he spent most of his later years in Iran, Syria and Britain with his Labanese wife. On a visit to Karachi to see his brother Hashim and sisters Syeda Anwar and Syeda Akhtar, Maulana Kazim suffered a massive cardiac arrest which proved fatal for the prominent religious scholar. He was laid to rest in Karachi but his brothers Maulana Alim and Maulana Qaim arranged an elaborate Fateha Khwani session in City. Ailing journalist Baqar Moosavi is the youngest brother of late Maulana Kazim.

In late 1960s and early 1970s Maulana Safdar Hussain al-Mashadi and Maulana Najmul Hassan Karraravi lived at walking distance from each other and were considered to be two of the topmost religious scholars not only of Peshawar but also of the whole province. As the coincidence would have it, two of Maulana Karraravi's sons - Syed Mohammad Rizvi and Shamsul Hassan Rizvi - strayed into journalism and joined daily Jang. SM Rizvi later founded his own Urdu paper Jiddat.