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Government intends to document economy through VAT: Fouzia
 Muzaffar Hameed May 22, 2010, 04:00:39 AM 

KARACHI : "All the sectors of economy generating income including agriculture must pay taxes," Chairperson, National Assembly's Standing Committee on Finance and Revenue, Fauzia Wahab, said here on Thursday. Briefing about her meeting with small traders at Karachi Chamber of Commerce and Industry (KCCI), she said the government intends to expand tax base and document the nation economy by implementing the vale added tax (VAT).

Dispelling the impressing that IMF is behind imposition of VAT, she recalled that Pakistan was facing serious economic crisis, which compelled it to approach IMF for financial assistance. "IMF was ready to provide financial assistant but had some reservations about repayment. At this stage it was Pakistan, who suggested imposition of VAT to broaden the tax net," she clarified.

Fauzia Wahab said in present set-up only few sectors are paying taxes including export, import, manufacturing etc, and the target is to bring all the sectors under tax net, which either enjoying exemptions or paying no taxes.

She hoped that after implementation of VAT all sectors including small traders would be brought into tax net and hinted that number of tax payers may be increased to 10.70 million. She said in present General Sales Tax (GST) regime, there are 12 different rates of GST ranging between from 17 percent to 25 percent. However, in VAT regime, tax rate will be uniform.

Fauzia Wahab expressed surprise over the reaction of business community to imposing VAT and said that GST is already existed which would be replaced by VAT. She agreed with a suggestion that fixed tax be charged form shopkeepers on the basis of shop size and its location. This suggestion will be to relevant circles forwarded for consideration, she assured.

Referring to a demand to withhold VAT for one year on the pretext that small traders could not maintain account records of their transaction, she disagreed with the demand and said, "what difference small traders will make in next one year when in the last 60 years they made no progress to maintain records of transactions," she added.

To a question about law and order situation in the city, she said all the coalition parties are working together, and with their active support the government would succeed in controlling the incidents of target killing.

Earlier, addressing the meeting, former president KCCI, Haroon Farooki said that Federal Board of Revenue (FBR) has failed to clarify what will be thew fate of the five zero-rated sectors in VAT regime. He was of the view that government was presenting new budget after every 15 days by increasing oil prices and gas and power tariffs, which are seriously impacting cost of manufacturing and life of poor people.

Leader of small traders, Rafiq Jadoon suggested that implementation of VAT should be postponed for at least one year and during this period workshops and seminars should be held to apprise small traders. He also demanded that small traders should be exempted from VAT. Tahir Khaliq was of the opinion that draft VAT laws in its present shape is neither implementable nor practicable. Implantation of VAT in present shape will created huge problems both for the government and business community, he opined.
 

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