Khyber Pakhtunkhwa to oppose withdrawal of fiscal relief package: Adeel

Khyber Pakhtunkhwa (KP) would strongly oppose any move by the federal government to withdraw fiscal relief package including sales tax and federal excise duty exemptions/concessions, granted to the business community and investors operating in the province and tribal areas.
This was stated by senior vice president of Awami National Party (ANP), Senator Haji Mohammad Adeel, in an exclusive talk with Business Recorder here on Wednesday. Adeel said that the KP government had urged the federal government to extend duty exemptions/concessions till 2015. He said that to generate additional revenue of Rs 10-12 billion during the next fiscal year, the Federal Board of Revenue (FBR) had proposed to the Ministry of Finance to withdraw fiscal relief package granted to the business community and investors operating in the KP and tribal areas in the upcoming budget (2011-2012).
In return it was suggested that the annual budgetary allocations of KP might be increased to compensate the province instead of creating discriminatory tax treatment among provinces, he added. Adeel termed the increase in development budget a drama, saying that the budgetary allocations for 2011-12 would be even less than the 2010-11 budget.
"We do not expect any increase in the development budget and it would be considered a step to deprive the province of these facilities," Adeel added. War against terrorism as well as last year's devastating floods, had completely destroyed the province's economy, he said adding that due to limited resources, the flood victims and internally displaced persons of KP were yet to be compensated.
He further said that investment in KP had already declined considerably and if the tax exemptions were taken back, it would be disastrous for the province. He informed that during the meeting of the Finance Ministry, FBR and Planning Commission held two weeks ago, KP had demanded an extension of the relief package till 2015.
He said that the meeting was apprised of the ANP's reservations over the move and even after this, the tax relaxations were taken back, the province would strongly oppose the move. The FBR had announced a fiscal relief package for the KP and Federally Administered Tribal Areas (Fata) in 2010 allowing different kinds of tax exemptions and concessions. Any business entity that owed to the government in the form of customs duty, sales tax or excise duty and income tax, received a waiver of the entire amount of penalty and default surcharge by the Board.
The FBR also allowed partial exemption of past liabilities of sales tax and federal excise duty through exemption of penalties and default surcharge. The Board has also allowed exemption from the FED on the goods manufactured in KP and tribal areas. The government had exempted sales tax leviable on supply of electricity by Peshawar Electric Supply Company or any other duly registered electric supply company to manufacturing units (having industrial connections) whether registered or not, located in districts of Hangu, Bannu, Tank, Kohat, Chitral, Charsadda, Peshawar, Dera Ismail Khan, Batagram, Lakki Marwat, Sawabi and Mardan.
Under the package, the government had exempted the entire amount of default surcharge and penalties payable by a registered person located in the districts against whom an amount of sales tax or federal excise duty was outstanding. The exemption of the FED is applicable on goods produced or services rendered in districts of Hangu, Bannu, Tank, Kohat and Chitral. The additional duties and penalties are not applicable on the registered persons of Agencies of Bajaur, Mohmand, Khyber, Orakzai, Kurrum, North Waziristan and South Waziristan.