SECP proposes reduction in corporate tax to the National Assembly – Part 2

Friday, January 13th, 2012 3:16:47 by

The attempt to lower the corporate tax will encourage privately owned businesses to enter the corporate world, which would eventually help them flourish. These attempts will also encourage the companies to create jobs in Pakistan.

Initially, the finance ministry and the FBR rejected the proposal stating that corporate tax is the major source of revenue to the state. If this chunk is minimized, the deficiency in the state income would severely hit the economy of the country. This amount of tax has provided a big cushion to the tax net in Pakistan and the government does not want to risk the inevitable if the proposal is accepted.

The tax system has always been standing on Achilles’ heel in the country. However, the approaches taken by the governments in the past have affected the corporate sector immensely. The corporation in a country are main source of income to the state but not the manner, Pakistani government has perceived in the past.

Ali said total worth of Pakistan’s largest stock market – the Karachi Stock Exchange – is unfortunately the lowest in the South Asia and Far East, which contains countries like Bangladesh and Afghanistan. It is shameful for Pakistan that its market capitalisation was recorded $39 billon, which is only 20.4 per cent of the total size of national economy. In this regard Indian stock market has 94.2 percent share, Malaysia has a whopping 185 percent and Sri Lanka 40.9 percent.

The Chairman also mentioned the oligopoly of the brokers in the country. “Currently, the ownership rights and trading rights are not segregated.”

So far the bill of reducing the taxes has passed the Lower House and is lined up for hearing in the Senate. This has happened for the first time that tax reduction bill has seen such success in the history of democracy.

He also asserted on bringing insurance on Agriculture and terrorism in the country. The insurance sector is already an undermined industry and need for corporatising the agricultural sector and crop insurance would bring prosperity to the sector that has most potential for income in Pakistan

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