DAILY BUSINESS NEWS SUMMARY IN BRIEF: 31.05.2011

Business News

Tuesday, May 31, 2011 08:44
-	Oil up in Asia as dollar slips
-	Interior Ministry budget estimated at Rs55.80 bn Rs0.99 billion have been allocated for Machine Readable Passport System and Rs.0.12 billion have been allocated for Borders Security Management.
-	Share prices shed gains at KSE Dewan Salman , volume leader, ended 42.02 percent higher at 3.38 rupees, while Dewan Cement rose 59.88 percent to end at 2.59 rupees. (Reuters)
-	Asian shares hit by eurozone debt, market holidays
-	Euro eases against dollar
-	Oil down in Asia EU, IMF and ECB officials experts are in Greece now reviewing progress on its May 2010 bailout programme, and must report soon on whether to grant the next tranche of funds.(AFP)
-	POL prices likely to dip from June 1 tre; kerosene oil by Rs5.50 per litre; light diesel Rs6 and; High Octane by Rs1.77 per litre.
-	Perks termed burden on national kitty It was proposed in the report that a transparent mechanism be adopted for selection government employees and appraisal of their performance.
-	Gas supply resumes in Faisalabad
-	KSE-100 index gains 27.40 points In the money market, overnight rates edges slightly lower and closed at around 13.50 percent, compared with the previous day''s close of 13.90 percent. (Reuters)

Plan to introduce Rs103bn new taxes in budget

ISLAMABAD: The government has decided in principle to introduce new taxation measures of Rs103 billion in the budget for 2011-12, mostly in the form of indirect taxes which will add to the burden on the common man.
The decision is aimed at keeping the budget deficit below four per cent — a condition that will pave way for release by the International Monetary Fund of a tranche of $1.3 billion.
An official privy to the budget-making process told Dawn on Monday that the government had assured the IMF that the measures would be introduced to achieve the revenue target of Rs1,952 billion.
He said an amount of Rs261 billion would be netted as a result of several factors, especially the rising inflation next year. The IMF has projected that Pakistan’s inflation next year could exceed 15 per cent which will contribute to an increase in the share of general sales tax in total collection.
According to the official, the base figure, a benchmark for revenue measures, has been set at Rs1,588 billion, considerably less than the collection target for 2010-11. But the IMF has estimated the figure at around Rs1,580 billion.
During recent talks with the IMF in Dubai, Pakistan’s economic team showed an upward revenue target as the base figure in a bid to reduce the size of new revenue measures in the budget — a move that could minimise political opposition, especially from the PML-N, during the process of getting the budget approved in parliament.
An FBR official said the failure to achieve the revenue target of Rs1,588 billion by the end of June as agreed with the IMF might lead to revision of all macroeconomic indicators.
Economic experts are of the opinion that reaching even close to the Rs1,588 billion target by the end of June will be quite difficult.
The revenue collection in May will be a deciding factor for the economic team to finalise the new measures. The government has estimated Rs152 billion revenue for the month and the FBR as on May 29 raised Rs132 billion. “We expect that the revenue collection will be closer to the target,” said an official of the finance ministry. The IMF will hold the fifth review on Pakistan’s economy in July to see the progress in commitments made at the Dubai meeting. “We have no other option but to cover the shortfall by either cutting expenditures or taking additional revenue measures during the post-budget period,” the official said.
He said if the government did not take new revenue measures there would be more pressure on other economic indicators. The only option for the government, he added, was to introduce new measures and plug loopholes to achieve the desired revenue target of Rs1,588 billion.

President amends Income Tax Ordinance 2001

ISLAMABAD: President Asif Ali Zardari has further amended the Income Tax Ordinance, 2001 where 15 per cent surcharge shall be payable by every taxpayer of the income tax.
It shall come into force at once.
Following is the text of the Ordinance: “No. F. 2(1)/2011-Pub.- The following Ordinance promulgated by the President is hereby published for general information:- Ordinance No. IV of 2011 An Ordinance Further to amend the Income Tax Ordinance, 2001 whereas it is expedient further to amend the Income Tax Ordinance, 2001 for the purposes hereinafter appearing; And Whereas the Senate and the National Assembly are not in session and the President is satisfied that circumstances exist which render it necessary to take immediate action;(47) [222(2011) (Ex.Gaz] Price: Rs. 2.00.
Now, therefore, in exercise of the powers conferred by clause(1) of Article 89 of the Constitution of the Islamic Republic of Pakistan, the President is pleased to make and promulgate the following Ordinances:
Short title and commencement:- (1) This ordinance may be     called the Income Tax (Amendment) Ordinance, 2011. (2) It shall come into force at once.
(2)Amendment of Section 2, Ordinance XLIX of 2001:- In the Income Tax Ordinance, 2001, after section 4, the following new section shall be inserted, namely:-    “4A, surcharge,- (1) Subject to this ordinance, a surcharge shall be payable by every taxpayer at the rate of fifteen per cent of the income tax payable under this Ordinance including the tax payable under part V of Chapter X of Chapter XIII, as the case may be, for the period commencing from the promulgation of this ordinance, till the 30th June, 2011.
(2) Surcharge shall be paid, collected, educated and deposited at the same time and in the same manner as the tax is paid, collected, deducted and deposited under this Ordinance including Chapter X or XII as the case may be:
Provided that this surcharge shall not be payable for the tax year 2010 and prior tax years and shall be applicable, subject to the provisions of sub-section (1), for the tax year 2011 only”.

Finance Act 2011: tax officials may confiscate all excisable goods

Finance Act 2011 would empower the officials of Inland Revenue to seize all excisable goods including cigarettes and beverages under section 26 of the Federal Excise Act, 2005. Sources told Business Recorder here on Monday that presently, the counterfeit cigarettes/non-duty paid cigarettes and beverages can be seized under rule 63 of the Federal Excise Rules, 2005.

The authority for seizure of counterfeit cigarettes/non-duty paid cigarettes is available under section 26 of the Federal Excise Act, 2005. However, for seizure of beverages no empowering section for seizure is available under the Federal Excise Act, 2005. The Federal Board of Revenue has proposed that the word "cigarettes" wherever occurring in section 26 may be substituted with the words "cigarettes or other dutiable goods" thus empowering officer of Inland Revenue to seize all goods liable to confiscation including cigarettes and beverages.

Presently, under section 26 (power to seize) of the Federal Excise Act, 2005, the counterfeited cigarettes or cigarettes which have been manufactured unlawfully or on which duty has not been paid as required under this Act and rules made thereunder, shall be liable to seizure besides the conveyance which has been used for the movement, carriage or transportation of such cigarettes.

For the purpose of this section, 'conveyance' shall include all of its fixtures, fittings and accessories etc, it added. The amendment to the section 26 of the Federal Excise Act, 2005 would empower the officials of Inland Revenue to seize all goods liable to confiscation including beverages. In this way, the powers of the tax officials would be enhanced in budget (2011-2012).

Plan for operation in N. Waziristan finalised: Mullen

WASHINGTON: The US military chief, Admiral Mike Mullen, said on Monday that the Pakistani government  would launch a major offensive on militants in North Waziristan.
“It’s a very important fight and a very important operation,” the outgoing chairman of the US Joint Chiefs of Staff told a television network.
In several interviews to US television channels, Admiral Mullen said part of his job as chairman had been to try and “close the trust gap” between the United States and Pakistan, which had built up over many years.
Mr Mullen said he visited Pakistan last week with Secretary of State Hillary Clinton to “show the strength in terms of our commitment” because “we’re going through a difficult patch right now after the (Osama) bin Laden operation”.
The United States has long demanded the operation to eliminate the Haqqani network, which Washington claims is protected by Pakistanis.
Apparently, an understanding for the offensive was reached during the recent visit to Pakistan by Secretary Clinton and Admiral Mullen.
According to the plan, Pakistani aircraft will “soften up” militant targets before ground troops move in to wind up the operation. Pakistan had already prepared a blueprint for the offensive, which was finalised during the Clinton-Mullen visit.
Pakistani diplomatic sources in Washington confirmed that “both sides have agreed in principle to carry out the offensive”, but like their counterparts in Islamabad, they refused to say when they expect the operation to begin. Pakistan maintains about 140,000 troops in the tribal region but military experts in Washington say it will have to bring in more troops for the operation to succeed.
“We were very frank with them and they were very frank with us,” said Admiral Mullen while describing his meetings with Pakistani leaders in Islamabad last week.
“On the army side right now there is a very significant introspective look and review that is ongoing. And I think they are going to have to get through that. And that makes sense to me,” he said.
“I did hear from the military leadership their continued commitment to look ahead and work with us and we think that’s important.”
Admiral Mullen said the reports of his allegedly tense conversations with Pakistani leaders were ‘overstated’.
“We had a very good, frank, open discussion that touched on a wide range of issues. We thought it was important to have the meeting face to face to reaffirm the commitment to the relationship,” he said.
“The Bin Laden raid, specifically is something that I know the Pakistani military, the Pakistani intelligence agencies are focusing on.”
Admiral Mullen noted that Pakistan was located in a very critical part of the world. “We have common interests, and it’s important that both sides continue to commit to eradicating those terrorists.”
The US military chief pointed out that in the US “one of the things that does not get enough focus is the sacrifices that the Pakistani military has made over the course of the last several years”.
They have lost thousands of soldiers in this fight while “10-plus thousand” were wounded.
“They have a significant internal threat and I think it’s vital that we continue to try to figure out a way ahead, even through these most difficult of times,” the admiral said.
The US military chief said the “most important part” of his and Secretary Clinton’s meetings in Islamabad was the categorical statement that they issued, which made it clear that “we’ve seen no evidence of the senior leadership had any knowledge of Bin Laden’s presence there”.
Bin Laden, he said, had to have “some kind of network … to be able to sustain an existence” but senior Pakistani leaders were not aware of this network.
“And the Pakistanis hear America’s displeasure over that loud and clear I assume,” he was asked. “Yes, they do certainly,” the admiral replied.
Reuters adds: Humanitarian agencies active in Pakistan’s northwest have been quietly told to prepare for up to 365,000 displaced people in advance of the military offensive in North Waziristan, a senior official with an international humanitarian agency said on Monday .
The official, who requested anonymity because of the sensitivity of the subject, was responding to reports that Pakistan would launch a military offensive against terrorists’ safe havens in the Afghan border regions.
“Humanitarian agencies operating in Fata and Khyber Pakhtunkhwa were given the heads up two weeks ago by the authorities of a possible displacement of up to 50,000 families,” he said.

MOHAMMED SALEEM MANSOORI

RAFI SECURITIES (PVT.)LTD.