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Shaukat Aziz said that the government is focusing on the levy of GST and evolving a mechanism for enforcing agriculture income tax by June this year. Broadening of tax net and imbibing tax culture are vital to lessen the burden of tax on others. He also reiterated that by next budget the number of federal taxes would be reduced to income tax, sales tax and customs tax.

These are the key priority areas the minister indicated in his address and question-answer session with the RCCI businessmen and industrialists.

The minister said that an official of the CBR, Malik Riaz, has been nominated to discuss the issue of GST with various chambers. His mandate is to work out a simplified formula and remove any difficulty faced by the business community.

The minister emphasised that there would be no escape from GST. The policy of the government is to widen the tax net so that the rates come down. He told businessmen that from January to June, the government would concentrate on broadening the tax base so that people pay taxes proportionate to their incomes. "That's the only way to reduce the burden of tax," the minister said and urged for cooperation from the people.

He held that GST was the most misunderstood tax. "A full-time member is working out the modalities with the chambers." He admitted that some hardships were associated with the GST but it has its good points also. With the increase in sales tax receipts the tax burden of other taxes would come down for the ultimate good of the country. He further stressed that the people must imbibe tax culture to pay their dues to the government. With higher tax receipts the fiscal deficit would be lowered, otherwise higher deficit would lead to higher inflation and lower growth, he added.

Earlier in his address, Shaukat Aziz said that the government had started, in earnest, the implementation of the economic package. A committee of young and dynamic officers has been appointed to monitor its implementation. On Monday he finalised the process of monitoring, he added.

Referring to specific issues of the economic package, the minister said that the committee has already designed the new food stamps which will be launched within a couple of months.

Another committee has been set up to design mechanism for enforcing agriculture income tax from next fiscal year.

The rates of return on national savings schemes have been reduced which would soon by followed by corresponding adjustment in State Bank auctioning rates and banks' lending rates, through the market process.

All whitener schemes have been discontinued and amnesty schemes for assets, sales tax and unregistered cars have been put in place.

The PTCL rates for data communication have been slashed by 25 percent.

Preparatory work for the establishment of 'Corporate and Industrial Rehabilitation Corporation' and 'Micro Credit Bank' have been initiated and both these organisations would be set up before the end of this fiscal year.

Necessary framework for the launching of the special development programme has been finalised and the work on selected schemes will commence in a couple of months.

Earlier, he mentioned that the government was focusing on four sectors of economy, namely: agriculture, small and medium size industries, energy and information technology and software. This would generate high employment, reduce trade deficit by import substitution, unleash untapped potential of IT and software industry and exploit gas reserves and develop small and medium industry.

Responding to a question, Shaukat Aziz said that the mark-up rate in Pakistan was very high. In fact, the intermediation cost is one of the highest in the world. The government has already reduced the rates of savings schemes and bank rates too, are being reduced. The State Bank, too, will announce, in a day or two, the reduction in the discount rate.

To attract investment in special sub-sectors, the government is convening meetings with special industries, and proposes to enhance incentives for investment.

The proposed 'corporate and industrial restructuring corporation', to be headed by Tariq Hameed, would look after the revival of sick industries. The loans of the sick units would be separated from banking loans and efforts would be made to revive the units.

Responding to a point that tariff rates were high and finished goods imports were hampering the development of domestic industries, Shaukat said that following the signing of WTO, the government has to keep its market open to foreign goods.

He said that the maximum limit of loan for small units would be Rs 50,000.

Land Reforms: Responding to a question, the minister said that the agriculture minister has made it clear that there is no policy of the government to pursue land reforms.

Earlier in his address of welcome, RCCI President S M Nasim said the addition of GST on the utilities is a big blow which would put extra burden not only on common person but commercial and industrial sector also. This will further accelerate the economic stagnation.

He added the present GST system is not practicable. "We should tailor our own system according to our requirements. Currently, the concentration of our policy makers are totally depending upon input and output adjustment, whereas 147 countries of the world are successfully collecting sales tax without this complication of input & output. The rate of sales tax is very high; it should be reduced according to the market condition." He proposed that GST rate should be less than 5 percent.

According to him any further upward revision in POL prices would adversely affect the growth of economy. "Our serious concern remains the revival of sick industry, which alone can provide sufficient boost in support of the economy. The business community assures of its support to the government in their economic revival plan."