Islamabad: Prime Minister Imran Khan on Monday constituted a committee to review proposals regarding the introduction of equitable taxation on income and assets — a news source reported. These proposals include the implementation of new asset taxes and a reduction in tax rates for the corporate sector and salaried persons.
A number of proposals were presented before the government’s economic team by former finance minister Dr Hafiz Pasha — with the plans having been formulated by some of the country’s top economists. PM Khan had previously directed Minister for Industries Hammad Azhar, Finance Adviser Dr Abdul Hafeez Shaikh, and Commerce Adviser Abdul Razak Dawood to review these proposals in detail so that they could eventually be implemented in the country.
Reportedly, the proposals include a plan for reducing the corporate income tax rate from 29% to 20%. As a counter-balance, it was further suggested that the government should impose a Capital Value Tax (CVT) at the rate of 1.5% on all assets, except property. The government has additionally been recommended to impose the CVT in cases were tax exemptions have been provided to some sectors of the economy, as taxes on assets are more progressive.
Mr. Pasha also informed the government that the richest 20% in the country were earning five times more than the poorest 20% and that this difference was even more stark in terms of assets, as the richest 20% owned 12 times more assets than the country’s poorest 20%.
Another proposal presented before the committee was to abolish the income slabs and introduce even more progressive tax rates. The introduction of a uniform rate of taxation for different sectors was also discussed. Pasha further proposed that instead of completely exempting the Capital Gains Tax on property after 4 years, the rate should be lowered depending on the length of the holding period.
