Pre-election gimmick! no increase in tax rates likely

As a pre-election strategy, the government, despite facing strong resistance from economic managers, is contemplating not to increase tax rates or impose new taxes in Budget 2012-13, Business Recorder learnt Friday.
According to sources, although the incumbent political leadership is facing severe financial challenges because of high borrowing, excessive expenditures, high oil imports, etc, they are keen to give unnecessary relief in coming fiscal budget with the aim to get support from voters in next elections.
On the one hand, the government has not only appeared unsuccessful to economise its running expenditure but also failed to attract foreign and local investments that led to create excessive burden on national kitty. On the other hand, the government has adopted facilitation policy just to get mileage in coming polls.
Recently, the Federal Board of Revenue (FBR) on the directives of high authorities has restrained its field formation to conduct income tax audit of individuals on the basis of personal expenditures till June 2013. The sources were of the view that the move was politically motivated as the government wanted to pacify agitating taxpayers before election year 2013.
They said the agricultural income is exempted from income tax but the trading in agricultural produce, which is generally carried out by commission agents through various 'mandis' managed through market committees, comes under the purview of tax regime.
Therefore, it has been proposed that the Market Commission Agent (MCA) registered with market committees, dealing in agricultural produce, be subjected to tax. However, the government is neither considering imposing new taxes nor increasing the tax rates in coming budget, sources maintained.
Replying to a question, they said the government, instead of providing unnecessary and unproductive relief like Benazir Income Support Program (BISP), has to announce investment-oriented budget to generate employment opportunities for masses. Moreover, they said the authorities should make substantial budget allocation for infrastructure development as it is used as an effective tool for economic revival by developed nations.
The sources said the government could attract investments, despite prevailing law and order situation, if the interest rate was reduced to reasonable level in coming budget.