The government has called an emergency meeting of CBR chairman Abdullah Yousuf and chairmen of all three stock exchanges in Islamabad to discuss the proposed increase of income tax on buying and selling of shares in budget 2005-06. Stakeholders are also likely to discuss the proposed 'service tax' on the brokerage commission to document this sector from next financial year. It appears that it is not a routine meeting to discuss budget proposals, but to work out modalities vis-à-vis proposed taxes on the stock exchanges. On Monday, the market nose-dived, which promoted the government to take immediate measures, as the federal budget announcement is only two weeks away.
Sources told this corespondent on Monday that tax authorities would submit their viewpoint on the proposed increase in capital value tax (CVT) applicable on shares' transactions on stock exchanges in view of the current market crises.
According to the CBR, stockbrokers are earning huge profits, but their contribution to the national exchequer is very nominal.
In this regard, the Karachi Stock Exchange (KSE) and Lahore Stock Exchange (LSE) chairmen will reach Islamabad on Tuesday to attend the meeting in the office of minister of state for finance Omer Ayub.
Sources said the government wants to take into confidence stock exchanges before increasing tax rates. Similarly, the levy of proposed 'service tax' would also be taken up in the meeting to obtain viewpoint of stock exchanges on the issue.
It is a good omen that tax authorities and representatives of stock exchanges will interact directly to improve taxation structure.