LAHORE (PR) - Pakistans Federal Budget 2010 aims to introduce reforms for macroeconomic stabilisation, greater provincial financial autonomy, poverty alleviation and creation of a fair tax system. The significant increase in the allocation of funds to provinces will facilitate in alignment of their decisions to the socio-economic needs of the citizens. Looking at the budget through the lens of ACCA Pakistan, the challenge for the provinces will be to create the financial and economic management capacity to spend the budgeted funds in a manner that delivers on their socio-economic aims in other words measurable outcomes that deliver real benefits to the citizens. A number of economic observers have repeatedly said that throwing more money into the coffers of provincial governments is only half the job, the other more important part is accountability and transparency of its usage, this calls for greater financial resourcefulness, enhanced financial reporting and management responsibilities. This results in the need for thorough accounting, auditing and financial management skills and knowledge enhancement as well as seeking professional expertise. As professionalism of public sector becomes an international best practice, the substantial increase in salaries of federal government employees may help in addressing challenges of recruiting and retaining professionals with the right mix of skills and knowledge thus contributing towards efficiency and performance of the public sector machinery. Organisations like the AGP and CGA are already fast-tracking their capacity building. Programmes like the project for improving financial reporting and auditing (PIFRA) is already resulting in greater accuracy and timelier financial reporting to ministries. This is vital for managing the revenue generation and intelligent spending of budgets. ACCA Pakistan considers the CGT (Capital Gains Tax) as a tax that would contribute to fairer distribution of wealth; ACCA Pakistan further endorses the phased approach to introduction of CGT. The road map for CGT provided by the budget allows ample opportunity for the accounting profession and their clients to factor in the impact of CGT on their strategies and operations. Businesses should look up to their tax advisers for better cash management and legitimate schemes to reduce the burden of CGT. The current budget appreciates the importance of investment to business activity. Abolishment of custom duty on selected livestock categories in line with the ACCA Pakistan budget proposals will boost high yielding breeds of livestock in Pakistan. Similarly reduction in filing requirements for withholding agents will lead to simplification of documentation. However the increase in tax rate for small companies from 20% to 25% may pose discouraging to enterprise in Pakistan. Appreciating ACCA Pakistans pre-budget recommendation to increase income tax exemption slab for salaried and non-salaried individuals which shall benefit 780,000 taxpayers approximately, concurrently increasing their disposable income and stimulating consumption; this budget envisages a fair tax system based on avoidance of disproportionate allocation of tax burden. The proposed system of General Sales Tax aspires to simplify the taxation system and avoid the incidence of a single tax rate of 15% to avoid burden on the tax payer. The tax exemption on education requires reflection. Applying the principle of ability to pay, the education sector may be classified into private and public sector education whereby private sector educational institutions may be taxed at 15%. With majority of Pakistans population comprising of youth, skills development especially in the rural areas is a priority. The proposed scheme whereby unskilled workers in rural areas will be guaranteed employment for one hundred days is commended. The success of this scheme lies in carefully considering the training element of the scheme which should endeavour to develop skills that are highly practical and employable in the factor market.