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RGST Imposition: Economic Team to Brief Political Parties
Monday, December 20, 2010

With the mounting pressure from the donors, particularly, the International Monetary Fund (IMF), the government economic team headed by Finance minister, Dr Abdul Hafeez Shaikh, is getting ready for second round of presentations to the political parties on Reformed General Sales Tax (RGST).

Dr Abdul Hafeez Shaikh and his team in the second round would try to convince the political leadership of the country that RGST is an integral part of the government's economic reforms programme initiated sometimes back with a holistic approach to document the national economy.

The political parties will be informed that failure on part of government to put in place proposed RGST will have far-reaching negative impact on Pakistan- both in terms of revenue generation and credibility to honour commitments with the international donors that in such case will simply add to Pakistan's economic woes in the near future.

The second round of the presentation to the political parties on RGST will commence in the next couple of days. The finance ministry has already sent revised draft on RGST presentation to Prime Minister Syed Yousuf Raza Gilani, for approval. RGST has emerged as a highly controversial issue at this point in time.

Seeing opponent's hostile mood, the government assigned the job to Dr Abdul Hafeez Shaikh to pacify the political parties in and outside the parliament. He had held separate meetings with MQM leaders in Karachi and then with Mian Nawz Sharif and Mian Shahbaz Sharif in Lahore in the recent past but without any positive outcome.

The leaders of these two important political parties conveyed to Dr Abdul Hafeez Shaikh and his team that it was not a proper time for the government to venture for any new taxation measures like RGST. They have also demanded to delay RGST imposition for at least one to two years.

The government is finding no way out of the issue. It has either to go for RGST at any cost and get the last two tranches of $3.4 billion of $11.3 billion from IMF under the standby programme to give some financial support to its lowering foreign exchange reserves or succumb to the opposition pressure to delay its implementation. The second choice can put the government in another crisis as Dr Abdul Hafeez Shaikh and his team has already announced to quit the government if RGST plan did not go through.

Labels: RGST