Another drama to camouflage new taxation

All eyes were on the National Assembly body taking up the highly controversial Reformed General Sales Tax (RGST) when it struck with a bizarre situation of its majority opposing the Chairperson rather than legislation in question. Apparently at least 10 out of 17 members of the NA Standing Committee have backed the application to Speaker National Assembly Fahmida Mirza seeking removal of Chairperson Fozia Wahab. Analysts perceive this new issue as yet another obstacle in the way of the passage of General Sales Tax Bill 2010, the legislation for RGST. However, insiders believe this is a scripted drama to get the proposed law passed by the NA without letting the public know who opposed it and who did not as they did in Senate. According to well-placed sources, President Asif Ali Zardari has told one of the coalition partners that the PPP has the sufficient number in the Lower House to ascertain the simple majority required for passage of the GST Bill. The President was even confident of getting support of the MQM, the coalition partner that has vowed to vote against the Bill, the sources quoted the coalition partner that met with the President. The sources were of the view that the President was holding a trump card close to his chest to be played at the eleventh hour to woo the MQM in favour of the RGST. But he would play that card only if the PPP fears defeat without MQM, they added. The sources were of the view that the President was aiming at achieving the simple majority preferably without the MQM. He has already established covert talks channel with the PML-Q as a prospective ally in the government in case the MQM parts its ways, which has though meagre chances to happen. Certain quarters are of the staunch view that the PPP government itself has been playing up the so-called Parliamentary Opposition to the RGST to tell the IMF that what a great challenge it was faced with. The IMF that already had been highly generous to Pakistan since the 2008 earlier in approval of the $7.6 billion standby (SBA) loan for 23 months and later in extending it to $11.3 billion as well as 25 months, is again likely to have a lenient view of Islamabads case. Although the Fund has conditioned the release of the remaining $3.6 billion to the imposition of the RGST, this time again supporting vote of the US would work. At the same time the US was most likely to use this extra-ordinary support for Pakistans case in the IMF as leverage for convincing Islamabad to launch an early army operation in North Waziristan. Notwithstanding the apex leadership, both political as well as military, has also already resolved not to open any new front in the given security situation in the region as well as inside the country, Pakistan would have to swallow this bitter pill for economic compulsions. Pakistans economy at the current juncture of time in the backdrop of unprecedented floods does not have the capacity to survive without IMF that sets trend for rest of the lenders as well as investors across the globe. Therefore, going by the American dictate could enable Pakistan get relaxation not only in the ongoing programme but also for a new IMF loan. Therefore, it is written on the wall by now that the government would get the Bill passed even after the IMF Executive Board meetings to be held in the middle of this month. At the same time the Funds Board would consider Pakistans case apparently on the pretext of deservingness of the flood-hit economy and actually under special instructions of Uncle Sam. Still avoiding to fall prey to the oversimplification of this case, it seems essential to note here that the passage of legislations for new taxations including RGST and flood surcharge would have far reaching implications on Pakistani politics. It would not be an exaggeration to conclude that issue of RGST would be one of the deciding factors in the upcoming local bodies elections if not next general elections.

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