Informal sector to be brought into tax net: MoF briefs ANP on budget

The government on Wednesday assured the coalition partner ANP that it would take measures to bring the informal sector into the tax net and as a first step 0.7 million people identified on the basis of assets and income were being taxed in the budget.
Talking to reporters after a briefing on the next year budget by the finance ministry, Haji Adeel, Zahid Khan, Ilyas Bilour and Afrasiab Khattak stated they have asked the economic managers that energy sector must be priority of the government in the budget to ensure growth being hurt by the power outages in all the sectors of the economy.
The coalition partner said the budget should not burden the common man and measures be taken for equity in taxes by bringing into the tax net those not paying taxes. The leaders of the ANP said they are against the tax exemptions and have warned the economic mangers of giving preferential treatment to any sector.
In reply to a question, they said their viewpoint was that every income in the relevant slabs should be taxed and were assured by the economic team for taking measures in the budget to broaden the tax base by effectively taxing the informal sector. Haji Adeel said they would be meeting again with the economic team to hand over their party proposals on the budget.
An official said the government has started taking the coalition partners into confidence after presenting budget strategy paper to the parliamentary committees on finance. He said Muttahida Qaumi Movement (MQM) would be briefed today (Thursday).
The economic managers reportedly informed the leaders of ANP that floods, security situation, energy shortages, rising international oil prices and higher interest rates have contributed to pressure on the government resources. The containing of fiscal deficit, high inflation, energy crisis and public debt remain major challenge for the government to deal with. The economic managers have proposed six budgetary measures for 2011-12 budget.
These have reportedly included containing the fiscal deficit to 4.5 percent of GDP, improving Tax to GDP ratio from 9.1 percent to 9.7 percent, gradual elimination of tariff differential subsidy on electricity (estimated at around Rs 186 billion in the current fiscal year), elimination of other untargeted subsidies (estimated at Rs 43 billion in the current fiscal year) - these subsidies will be targeted and zero net financing from the SBP each year. The economic managers reportedly stated that they are consulting all the political parties to prepare a consensus budget to deal with the economic challenges.