islamabad -

The constitutional ambiguities have stopped the caretaker government from issuing the presidential ordinance for imposing new taxes.

President Asif Ali Zardari on Wednesday signed the ordinance allowing caretaker government to impose new taxes at the time when new government is all set to take the charge and present budget for next financial year 2013-2014. However, Chairman Federal Board of Revenue (FBR) Ansar Javed and spokesperson Riffat Shaheen contradicted the signing of any presidential ordinance that allows introduction of “mini-budget”.

However, sources in FBR have confirmed to The Nation on Thursday that President Asif Ali Zardari had signed an ordinance on Wednesday. Sources were of the view that caretaker government is examining whether it could introduce taxation measures as such moves could be challenged in the apex courts of the country. Therefore, caretaker government had not issued the ordinance yet till filing of this story.

Sources said that presidential ordinance would provide little relief to the caretaker government as not much revenue is expected to be generated in last month (June) of the outgoing financial year. However, this move would provide upcoming PML-N government some relief, as it would not have to take unfriendly taxation measures in its first budget.

According to the proposed ordinance moved by FBR to the ministry of law, justice and parliamentary affairs, the government has planned to impose 10 percent withholding tax on electricity consumers using 1000 units. The FBR also proposed to enhance withholding tax on withdrawal of cash from banks from 0.2 to 0.3 percent. According to the FBR’s plan, the standard rate of general sales tax would be increased. Similarly, the FBR also wants to raise the GST to standard rate (16 percent) on sugar from existing eight per cent. The FBR proposed, on the booking of new car, five percent of the value of the car would be charged.

The Federal Board of Revenue is struggling hard achieve the revised revenue collection target during the ongoing financial year 2012-2013 that is forcing tax department to take additional revenue generation measures. The Federal Board of Revenue has provisionally collected Rs 1,590 billion during ten and half months (July-May 15) of the current fiscal year 2012-13.

The FBR has several times revised the tax collection target during the present financial year. The budgetary target of Rs 2,381 billion was revised downward to Rs 2,191 billion for 2012-13. The FBR target has been further slashed to Rs 2,050 billion. FBR has to collect Rs 458.4 billion in remaining period of (May-June) 2012-13 to reach figure of Rs 2,050 billion. The current pace of revenue collection revealed that it would be an uphill task to even reach the figure of Rs 2,000 billion by the end of 2012-13.