ISLAMABAD - Pakistan's capital market, enjoying consecutive exemption from the Capital Gain Tax since 1975, is most likely to face the imposition of the levy from July 2008 as the government was no more in a position to extend the facility any more. According to the market sources, the imposition of the Capital Gain Tax would impact negatively on the sentiment of trade more than its contribution towards the growth in overall revenue collection by the Federal Board of Revenue. The bourses of the country have already proposed to the Ministry of Finance through the Securities and Exchange Commission Pakistan that the already imposed Capital Value Tax (CVT) should be withdrawn in case the Capital Gain Tax is to be levied. However, the market players were not hopeful about withdrawal of the CVT describing it as contrary to practice on part of the successive governments not to withdraw any tax once imposed on any sector of the economy. The sources were of the view that the upcoming Budget 2008-09 would be tough since the government was in dire need of enhanced revenues in the coming financial year if not for the outgoing one. Therefore, they added, there was nothing in sight that the government could provide to the general public as relief. On the other hand, they pointed out that the government would have to take stringent tax measures to meet the projected revenue shortfall in the given political circumstances. "It was not only Pakistan exempting the traders from the Capital Gain Tax, rather it has been the practice throughout the world to do so in order to encourage portfolio investments," the sources maintained. Denouncing the impression of the stock market as "sacred cow" with regard to the tax payments, the sources said, Pakistan's capital market has been the largest tax-paying segment of the economy. The Capital Value Tax (CVT)has already been contributing nothing less than five billion rupees to the national exchequer annually. Therefore, the sources believed that the withdrawal of the exemption from the Capital Gain Tax would not be contributing much more than that. Moreover, the sources were of the view that mostly the institutions, foreigners, and hi-tech individual players have been benefiting from the exemption on the Capital Gain Tax. The sources added that the small investors were not availing any notable benefit from the exemption from the Capital Gain Tax. According to the sources, the deduction of the Capital Value Tax was a foolproof collection for the FBR as there was no human hand involved to evade any portion of the CVT applicable to each transaction. The automated trading and settlement system in place was automatically deducting the CVT to be deposited into the FBR's account as tax. Therefore, no tax evasion was possible in the case of CVT collection, the sources maintained.