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In a document on direct tax reforms for inclusive growth, Dr Hafiz Pasha, former Finance Minister of Pakistan has made certain startling disclosures. According to him, the Federal Board of Revenue (FBR) was suffering a massive revenue loss of Rs 361 billion per annum (equivalent to 1.6 percent of the GDP) as a result of exemptions and concessions to various sectors. Estimates reveal that losses on account of tax holidays (lifetime) to Independent Power Producers (IPPs) were Rs 63 billion, under-recovery of capital gains on securities and property at Rs 70 billion, accelerated depreciation allowance at Rs 64 billion, tax deduction on provisioning by banks at Rs 24 billion, exemption of business income of trusts and foundations at Rs 12 billion, concessionary rates Rs 34 billion, tax deduction on WWF and WPPF payments Rs 11 billion, low rates of AIT Rs 40 billion and other revenue losses Rs 43 billion. The data reflects both individual and corporate tax evasions. Fiscal reforms recommended by Dr Hafiz Pasha included elimination of tax concessions, introduction of inheritance tax and taxation on foreign income of residents (citizens) from countries where Pakistan had inked avoidance of double taxation agreements. He also suggested introduction of corporate assets tax at 0.25 percent to finance cost of floods/IDPs, levy of withholding transactions tax at 0.5 percent on securities and rationalisation of several other rates and schedules. Implementation of reforms as proposed by Dr Pasha could raise additional revenues to the tune of Rs 200 billion. While some of the proposed measures may be non-starters because of decisions by courts and some because of infirmities in tax administration, a concerted effort in this direction is certainly warranted.

Continuing to commit atrocities in the occupied Palestinian lands, last Wednesday Israeli troops killed Ziad Abu Ein, a Palestinian Authority minister and head of the 'Committee to Resist Settlements and the Wall'. Abu Ein, accompanied by local and some foreign activists, had gone to the West Bank town of Turmusaya - where Israel has built settlements over much of the Palestinian land - to mark the International Human Rights Day by asserting his people's rights with the symbolic gesture of planting olive trees. It was a perfectly peaceful demonstration until Israeli soldiers confronted the group in its usual violent manner firing tear gas and stun grenades. Soon enough, an Israeli soldier grabbed the Palestinian minister by the throat, another hit him in the throat while a third soldier with a helmet head-butted his chest leading to death. Before the attack Abu Ein had told Palestine TV the obvious: "this is terrorism of the occupation, this is a terrorist army, practising its terrorism on the Palestinian people. We came to plant trees on Palestinian land, and they launch into an attack on us from the first moment, nobody threw a single stone."
Terrorism has been around us for many years now, but what sets apart the terrorist attack on the Peshawar Army Public School on Tuesday as the ultimate in savagery is the sheer scale of its horror. Nine gunmen, disguised as paramilitary soldiers, entered the school and shot dead 131 school children and 10 others including the school principal and injured almost the same in number in a brazen daylight attack. Not that the big tally of fatalities was the terrorists' only concern they conveyed in no uncertain terms also that they are brutal and cruel like none ever before. They hounded and hunted down the children, chased them from classrooms to classrooms, shot them in foreheads and at legs of those hiding under the benches - and even burnt alive a lady teacher tied to the chair for the innocents to witness the grisly spectacle. "I folded my tie and pushed it into my mouth so that I wouldn't scream ... the man with big boots kept looking for students and pushing bullets into their bodies," says a pupil who was shot in both legs. Not somewhere in the distant mountainous North Waziristan was this devilish theatre staged; it was in the heart of Peshawar, adjacent to the Army Housing Colony and at the time the provincial capital was on red alert apprehending a severe backlash of the ongoing military operation in tribal areas. Is it that the intelligence failed, or was it a security lapse? Let there be a thorough investigation and responsibility fixed. And there is no confusion also as to who was behind this attack - within hours of the attack the Tehreek-e-Taliban spokesman, Muhammad Khurasani, was on phone claiming its responsibility. "We selected the army's school for the attack because the government is targeting our families and females. We want them to feel the pain". Yes, the people of Pakistan have been immensely anguished over the massacre, but they are definitely not frightened into submission. In fact, the contrary has happened - whatever little sympathy the TTP enjoyed among the people the outfit it has squandered away by attacking innocent schoolchildren.
Mercifully, PTI's shutdown of Karachi and Lahore passed off peacefully. As per an announced plan the party activists blocked the cities' main arteries putting hurdles on the roads and burning tyres to prevent movement of traffic. But by and large, they registered their protest in a civilised manner. Credit is due to the provincial governments also for ensuring no one caused any provocation to the demonstrators. The police were under orders not to react to any irritant. Equally important, the MQM, PPP and PML (N) allowed PTI to make a show of strengthen in the cities that they regard as their domain respectively. Still, the shutdown did exact a heavy cost both in terms of financial losses and inconvenience to citizens who needed to undertake important tasks on the day. Badly hit by the closure, of course, were daily wagers and the seriously sick who could not reach hospitals.
It is a matter of great concern that cars assembled/produced in Pakistan do not meet international standards and buyers are generally fleeced for want of a choice. According to a report in this newspaper on 9th December, 2014, Engineering Development Board (EDB), in a meeting presided over by the Minister of Industries and Production, Ghulam Murtaza Jatoi, expressed its serious concern on the quality of new cars, premium (money) on purchase of cars and some upfront payments. Advisor, Pakistan Engineering Council (PEC), and certain other participants were also reported to have pointed out that the quality of locally assembled vehicles was not up to the mark but consumers had no choice in purchasing various kinds of models of vehicles and upfront costs, advance payments etc had shaken consumers' confidence. "Product recall" system was also not in place. Additional Secretary, Ministry of Commerce, stressed upon the need for adoption of standards and quality assurance for all the products and said that the absence of quality standards was seriously hampering the exportability of Pakistani products even in country's long-established export markets. Pro-Rector, NUST, said that the Army had put in place various standards, including for motor vehicles and buildings which are observed while making procurement. Pakistan automotive industry was engaged in assembly operations that was not value-added manufacturing. General Manager (Business Development/Policy) of EDB, spoke about the present level of indigenization and said that 70 percent deletion had been achieved by M/s. Suzuki in the case of its Mehran model whereas other assemblers had achieved a 50 percent localisation.
With one more shutdown, this one to be countrywide on Thursday, the Pakistan Tehreek-e-Insaf will have completed its Plan-C. The one in Lahore, on Monday, was indeed a big success, not because it was widely observed, but for it being generally peaceful unlike Faisalabad. Given that all major political parties have pockets of committed workers and supporters in all big urban centres, particularly in Punjab, they have the potential and wherewithal to shut down a city whenever they want. To the extent that such shutdowns paralyse life for its duration they indeed are political victories. But the question whether they can force the government of the day to change in a way the protestors want has a clear answer: that is no more the case in today's Pakistan. Invariably, the authorities take shutdowns, sit-ins and road-blockings as law and order situation and treat them accordingly. Gone are the days when powerful dictators like Field Marshal Ayub Khan would call it a day instead of putting up with incessant refrain 'Ayub kutta hai hai'. Thousands of PTI and PAT workers have been out on the roads, at night-long dharnas and long marches, but is there any tangible, meaningful change of heart on the part of Nawaz Sharif government? None, essentially because, the victim of the dharnas and shutdowns is not the bigwigs of the government; it is always the man in the street that cannot go to his work, his children cannot attend schools, day wagers go hungry and patients die in ambulances before reaching hospital. It is high time that before launching Plan-D the PTI chief, Imran Khan, takes a break from his hyper-active street protesting and gives a cool thought to what his three-month-old anti-Nawaz Sharif campaign achieved and not achieved and why not.
Finance Minister Ishaq Dar continues to be optimistic about the prospects of country's economy. Addressing representatives of the print media recently, he said that budget deficit had already been reduced from 8.8 to 5.2 percent by increasing revenues by 16 percent, cutting expenses of the PM's House by Rs 40 million and abolishing unaudited secret funds of 34 departments, except those of ISI and Intelligence Bureau. The government had also planned to reduce it further to 4 percent of GDP by exercising strict fiscal discipline. Macroeconomic indicators such as those pertaining to the stock market, value of the rupee and revenue generation have improved considerably. Authorities are also striving to tackle the problem of terrorism and make speedy progress in education, health and energy sectors. Road shows were conducted in the Middle East and Sukuk was launched which was oversubscribed by 14 times. Moody's changed Pakistan's rating from negative to stable and Japanese agency JITRO announced that Pakistan would be the second best choice for foreign investment while international financial institutions said that the country could become the 18th biggest economy of the world. The government is committed to ending corruption, ensuring transparency and taking foreign exchange reserves to the level of dollar 15 billion by December 31, 2014. Previous government had ignored the imperatives of economic growth and revenue generation and international financial institutions were predicting that Pakistan would default in 2014. It had also given a subsidy of Rs 600 billion to industrial, commercial and other consumers who could afford to pay full electricity bills. The Finance Minister, however, reminded that Pakistan is caught up in a vicious circle and "everybody has to work hard for the betterment of the country".


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ICT 2014

Foreign Debt $61.805bn
Per Cap Income $1,386
GDP Growth 4.14%
Average CPI 8.6%
Trade Balance $-2.309 bln
Exports $1.957 bln
Imports $4.266 bln
WeeklyDecember 18, 2014
Reserves $14.04 bln