Re: A critical look at the Pak economy
He will not provide you with any links…I already tried but was not able to get any response from him…I brought it to the attention of mods also as it is a clear violation of rules and regulations of the forum, but it seems they are biased when it comes to Saleem bhai’s postings and tend to ignore the rules… anyway let me try…
www.imaginationsofsaleem.mqm.org
Let me try to expalin the matter from official finance ministry and cbr links…
Total federal tax reciepts of the government are Rs 835 billion rupees…
The contribution of indirect taxes in these total reciepts is 69%, and direct taxes is 31%…
http://www.fbr.gov.pk/FRS/2007/May12-2007.pdf
See page 8 of this report…
Indirect taxes are actually consumption taxes…means pay as you consume…and have no relation to where these taxes are collected…but they are linked with GDP share…Punjab being the largest GDP contributor in the country with a higher GDP per capita than Sindh rural/urban…therefore is a major contributor to the indirect taxes…eg. telecommunication sector…when you make a phone call you pay sales tax/excise duty…when you refuel your car you pay indirect taxes on petrol…thus it is irrelevant to discuss where these indirect taxes are actually deposited in the national exchequer…but they are actually contributed by the consumers…according to the GDP percentage…
Now for direct taxes which contribute 31% of the total…the major source of direct taxes is Income tax…and they way it is implemented in Pakistan it has become mostly an indirect tax as well…meaning when you import/export something you pay a fixed amount of income tax…when you make supplies to any govt./private organisation you pay a fixed amount of income tax…irrespective of your actual profit…anyway putting this argument aside the following link shows 48% of income tax is collected in Karachi and 52% is collected elsewhere…
http://www.cbr.gov.pk/YearBook/2001-02/StatisticalTables.htm
Now to assume this income tax is actually contributed by income’s generated in Karachi are highly misleading because…
a) It includes income tax charged on imports/exports which are routed through Karachi…
http://www.fbr.gov.pk/FRS/2007/May12-2007.pdf
See page 17 of the report where a pie graph is given showing the contribution of exports at 5.3%, imports 16.7%, contracts 32.7%, telephone 8%, electricity 3.3%, cash withdrawl 2.2% and all these are actually indirect taxes collected as income tax…again contributed by consumers…linked to GDP…as they consume..
b) Many large scale tax payers who generate incomes all over the country pay their income tax in Karachi…I’ll give you examples of just two companies in order for you to understand the reality…ICI is in three business sectors…polyester-paints-soda ash…all their manufacturing units are in Punjab and 90% of their sales profile is in Punjab…but they pay their income tax in Karachi…Similarly mobilink has more than 60% sales in Punjab…means 60% of their income is generated in Punjab…but they deposit all their income tax in Karachi…
Same is the case with banking companies, finacial services, logistic companies, pharma companies, POL compaies, insurance companies and so on…all these sectors are large scale tax payers with major chunk of tax reciepts as far as income tax is concerned…they deposit all their income tax on incomes generated everywhere in the country…
Any attempt to link distribution of taxes between the provinces to collection…will require major reforms in federal structure of the country…and market access will be reconsidered at that time…Punjab will try to ensure the tax contributed by Punjab consumers, and taxes resulting from incomes generated in Punjab get deposited in Punjab…
Punjab is the manufacturing/consumption base of Pakistan, a major contributor to the GDP and revenue generation in Pakistan…and we are not intrested in your money…but will never give up what is rightfully ours…
http://www.nation.com.pk/daily/june-2006/14/index1.php
BY OUR STAFF REPORTER
LAHORE - Punjab Annual Development Plan for the financial year 2006-07 would be of Rs 100 billion, Chief Minister of Punjab Ch Pervaiz Elahi said in his pre-budget policy address on Tuesday at his secretariat.
He said that the increase in the ADP was phenomenal in the past six years; when it was only Rs 13 billion in the last year of the previous political dispensation in 1999-2000. He maintained that due to the increase in the budgetary allocations, the per capita resource input for a single citizen has swelled from Rs 169 per annum to Rs 1152, registering an increase of 582 per cent over that of 1999-2000.
Dilating upon the impact of policies pursued in various sectors as well the Gross Domestic Product of the province, he stressed that against growth target of 7.9 percent, 9.2 percent was achieved for the year 2004-05, and that GDP growth for Punjab by the end of 2005-06 was estimated at 7.2pc.
According to him, the Punjab GDP was estimated at Rs 2,855 billion, which was almost 59.1 percent of the national GDP. He said that in terms of Punjab contribution to national GDP estimates, the share stood at 59.3 per cent in the services sector, 60.9pc the wholesale and retail sector, 55.2pc in agriculture and 63.9pc in manufacturing.