Business News
Thursday, June 09, 2011 17:12
- Stocks slip 37.15 points
market, dealers said. (Reuters)
- Gold price at record Rs51,850
The association cited increase in value of dollar against rupee behind the recent hike.
- Asian shares dip on US woes, Sydney bounces
- Oil up in Asia as OPEC keeps production steady
- Euro rises ahead of ECB policy meeting
- Petrol shortage irks Karachiites
Replying to the question, he said that petrol pump owners across the country would go on strike if their profit would not be increased.
- KSE-100 index gains 52.30 points
In the money market, overnight rates ended at 12.75 percent, lower than Tuesday''s close of 13.0-13.5 percent, dealers said.
- OMCs directed to ensure supply of petrol to market
- Attock Refinery Limited (ARL) will repair the damaged plat former sooner than planned in mid July.
- Asian markets down after gloomy Bernanke speech
- Dollar falls against yen after Bernanke''s remarks
Cyclone forecast drives residents of Thatta’s coastal areas to safer places
THATTA: Panic continued to grip the coastal areas of Thatta district amid forecasts of cyclone and stormy rain for Friday.
A large number of people living near the coastal belt have started shifting to safer places.
The district administration became active and directed revenue and other government department officials to inform the people living in far flung areas about the expected cyclone and heavy rains.
Volunteers of the Fisherfolk Forum and other social welfare organisations were also reportedly active in warning the local population regarding the predicted storm.
According to district administration sources, Pakistan Navy had also been contacted to warn off shore boats to return.
District Coordination Officer (DCO) Thatta Jaffar Abbasi told media representatives that preventive measures had been adopted to meet any eventuality in case of cyclone and heavy rains.
Income tax on agriculture
Tax mobilisation efforts in the country have been hampered by a variety of factors including the reluctance or incapacity of the provincial governments to raise resources from those sectors which strictly fall in their domain.
In order to partly address this problem, the Prime Minister in a recent meeting of the Council of Common Interest (CCI) had constituted a committee under the chairmanship of the Minister of Finance to work out the modalities in consultation with the provincial financial ministers to increase tax collection from the agriculture sector through effective enforcement at the provincial level.
However, reliable sources have told Business Recorder that provinces were not prepared to brook any kind of interference from the Centre in the existing agriculture taxation regime and had, instead, sought details of declared agriculture income from the FBR. Also, the provinces had argued that there were already two kinds of taxes on the agriculture sector, namely tax on land and tax on net income. Besides, under the 1973 Constitution, agricultural tax is a provincial subject and, therefore, the federal government should not interfere in the matter.
According to the federal Finance Minister, ways and means were discussed in the meeting for effectively improving the agriculture income tax collection and issues such as the possible increase in the rate of agriculture income tax, uniformity in their rates in all the four provinces and a uniform assessment mechanism and tax collection strategy were yet to be decided.
The problem was further compounded by certain disagreements among the provinces themselves. For instance, while Khyber-Pakhtunkhwa and Punjab seemed to be agreeable to a uniform rate of agricultural taxation, Balochistan favoured separate income tax rates, keeping in view the state of the agriculture sector in each province. Finance Secretary of Balochistan also contended that floods had damaged agriculture in his province and the farming community was unable to bear a further burden.
Looking at the proceedings in the latest meeting, it is abundantly clear that despite all kinds of arguments and pressures to impose income tax without any discrimination on all sectors of economy, including agriculture, real progress on the subject is close to nothing and the same old pretexts are advanced again and again with a view to defending an indefencible position.
The excuses of separate jurisdiction of sectors for income tax purposes, net income, etc, are undoubtedly against the just canons of taxation and continue to add to the frustration of those who pay their taxes honestly and are often harassed by the tax collecting machinery due to one reason or the other for undue gratification.
Class distinctions have become so sharp that while low-level employees in various professions have to bear the tax burden, rich agriculturists living in posh localities enjoy their tax-free status without any remorse. The tragedy is that such an inequitable system forces others to evade taxes and leads to all sorts of leakages, due mainly to the aggregation of income originating from various sources for tax purposes.
The argument that agriculture is already paying indirect taxes and should, therefore, be exempt from direct taxes is not valid since everybody in the country is paying indirect taxes in one form or the other. In short, it is extremely difficult to understand, if not impossible, to justify the exclusion of the agriculture sector from the tax net which contributes to about 25 percent of the GDP and is a major source of income for some of the richest families in the country.
Apparently, Dr Hafeez Shaikh has been unable to develop a consensus on the subject in the latest meeting and, as such, the provincial governments are unlikely to incorporate any measures in the forthcoming provincial budgets to frame rules and harmonise the collection mechanism of tax on agriculture income with uniform rates to enhance revenue and have an equitable system of taxing all kinds of income irrespective of the source. Such a change in the mindset was needed.
Changing the legal framework would be the first necessary step for the provincial governments. In directing technology and trained manpower and linking them with FBR, need to be logically the next steps to develop their own capacity for the purpose. Asking the FBR to provide them details of taxpayers claiming earning from agriculture and cross-matching it with crop earning from the farm is not possible without technology in the revenue departments of the provinces. Let us not put the cart before the horse.
We would, therefore, urge upon the provincial governments to realise the gravity of the situation, frame the relevant rules and take all the necessary steps to proceed in the desired direction as soon as possible so that meaningful progress could be made in bringing the agriculture sector into the tax net as soon as possible, in order to ensure equity in the country's taxation system and remove a major distortion from the system.
Technical problems at refineries cause petrol shortages
The current shortage of petrol across the country especially in Punjab is attributed to non-availability coupled with non-functioning of plate-formers of three refineries, well informed sources told Business Recorder. Non-availability of petrol continues despite Prime Minister's directives to Pakistan State Oil (PSO) to resolve the issue, and the public continues to face difficulties.
In parts of the country, petrol pumps were seen overcharging consumers and long queues were witnessed at pumps where petrol was available. "Petrol shortage is expected to continue for another couple of days as the oil vessel will berth on Saturday," said an oil industry analyst on condition of anonymity. Besides, Sindh, Muzaffarabad, petrol shortage continues in Lahore, Multan, Minwali, Dera Ghazi Khan, Bahawalpur, Muzaffargarh, Rajanpur, Lodhran, Khanewal and Vehari.
One of the oil industry stakeholders told Business Recorder that the plate-formers of two refineries ie Attock Oil Refinery and National Oil Refinery are not functioning. The plate-former of National Oil Refinery has started regeneration. He added that Pakistan Oil Refinery's plate-former also stopped working, and it will take time to come online. The federal government has allocated Rs 7.921 billion subsidy for refineries in 2011-12 against Rs 10.807 billion earmarked in 2010-11.
Refineries, sources said, are annoyed at the government's decision to slash subsidy and a reduced supply may be their response, commented an insider. The Oil and Gas Regulatory Authority (OGRA) has issued notices to two refineries seeking reasons for a reduction in supply. Refineries maintain that they supply oil at a rate lower than imported refined oil and therefore they deserve some recompense for their billions of rupees worth of investment. "If the government imports refined petrol its price will be Rs 6 higher than petrol being supplied by the local refineries," said another analyst.
According to him, if the government relies on imported oil, roads from Gwadar to upcountry will be empty of vehicular traffic as there is no infrastructure to transport it upcountry. Local refineries, he added, cannot supply petroleum products at the dumping price of Saudi Arabia. The Minister for Petroleum and Natural Resources, Dr Asim Hussain, a very close aide to the President Asif Ali, is currently in the United Kingdom and is therefore unable to deal with this shortage.
Meanwhile, Prime Minister asked the Secretary Petroleum to instruct the Attock Oil Refinery to remove the technical fault urgently. The fault had ultimately caused shortage of gasoline supply to some areas of Punjab and Sindh. The Prime Minister gave these instructions during a meeting with the Secretary Petroleum and Nawab Hasan Ali, Director PARCO at the PM House here.
Gilani directed the Ministry of Petroleum to submit the proposed plan for establishment of power project in PARCO Refinery at Kot Adu, Muzaffargarh. He also directed to finalise a plan for the proposed Khalifa Costal Refinery; a joint venture with UAE. He advised the Ministry to undertake the projects on fast-track and ordered immediate preparation to attract this biggest foreign direct investment.
The Prime Minister said exploration and development of energy resources was his government's top priority. He said it was extremely important to enhance production of oil and gas from domestic resources to bring the country out of difficulties and accelerate pace of development.
He discussed the possibilities of establishment of a refinery project close to Gwadar. He also discussed various issues relating to PARCO and exploration of new oil and gas fields. The Secretary Petroleum and Director PARCO briefed the Prime Minister about the proposed Khalifa Costal Refinery project. The Director PARCO stated that this project has a potential to attract US $6 billion foreign direct investment in the country. The project also has a big potential to export surplus petroleum production after meeting the country demands, he said.
Mohammed Saleem Mansoori
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