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Major changes on the cards for boosting tax-to-GDP ratio to 15pc

Major changes on the cards for boosting tax-to-GDP ratio to 15pc
Inflation

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Major changes on the cards for boosting tax-to-GDP ratio to 15pc

A decision has been made to introduce changes in the tax policy for increasing the tax-to-GDP ratio to 15 per cent through close collaboration between the Federal Board of Revenue (FBR) and the International Monetary Fund (IMF), as Pakistan is searching for ways and means to enhance revenue collection, sources say.

The proposed move comes after the current economic crisis again highlighted the failure to expand tax net while imposing direct taxes and include wealthy individuals as well as booming and profitable sectors like real estate and retail to the list of filers.

It isn’t a surprise that the inability to enhance the tax-to-GDP ratio, currently among the worst in the wrold, is the root cause of the economic troubles Pakistan has been going through as different exemptions and the culture to avoid paying taxes means the government is neither able to meet its expenditures nor boost the development budget.

The result is obvious: the country lacks basic infrastructure and human resources catering to the needs to 21st century economy as Islamabad continues relying upon assistance from friendly countries, donor agencies and the IMF-like financial institutions.

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But this dependence has serious consequences for the nation as the state policies are adopted according to the conditions set by these foreign actors.

Meanwhile, the burden is always shifted to the common people through indirect taxes and higher prices of electricity, gas and petroleum products, which has been the main contributor to the prevailing cost-of-living crisis triggered by a persistent record-high inflation.

According to the sources, the government will prepare a compliance improvement plan by March next year. It is important to note that the current $3 billion stand-by arrangement is set to expire on March 31.

In this connection, a risk register for the possible taxpayers – both the filers and tax evaders – would be finalised on the basis of information shared by the FBR field formations.

The necessary data for this purpose is to be compiled by using different sources including banks, the National Database and Registration Authority (NADRA), and the integration system developed by the FBR.

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Hence, the whole exercise would help to identify and list the people who are currently not among the taxpayers while also sharing their details to the IMF, which has been press Pakistan hard to widening the tax base and collection.

The amendments, the sources say, will make the risk compliance management a part of the tax policy as a new round of talks is scheduled for today (Monday) between the FBR and an IMF team to separate the tax administration and policy.

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UK job vacancies fall 15pc year-on-year in January

UK job vacancies fall 15pc year-on-year in January

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UK job vacancies fall 15pc year-on-year in January

British employers advertised the fewest jobs in nearly three years last month, with numbers down 15 per cent from a year ago, figures from recruitment data company Adzuna showed on Monday, adding to signs that the labour market is cooling.

Last week Bank of England Governor Andrew Bailey welcomed what he described as “full employment” – with the official UK jobless rate at 3.8 per cent – despite the economy entering a shallow recession in the second half of last year.

However, the central bank wants to see wage growth slow from rates of more than 6pc in order to put downward pressure on inflation, which remains double its target.

Falling job vacancies offer a potential sign that employers are finding it easier to recruit than in the immediate aftermath of the COVID-19 pandemic, when the number of vacancies peaked at more than 1.3 million.

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Adzuna said 867,436 jobs were advertised in Britain in January, based on its analysis of more than 1,000 online sources. This was the lowest number since April 2021 and down from more than 1 million a year earlier.

“January 2024 has proven to be one of the most difficult starts to the year for job hunters in recent years with companies continuing to put hiring plans on ice,” Adzuna co-founder Andrew Hunter said.

The number of job seekers per advertised vacancy rose to 1.81 from 1.48 a year earlier.

However, Hunter said, preliminary data for February suggested the number of vacancies was stabilising.

Previous vacancy data from the Office for National Statistics showed an 18pc annual fall in job vacancies for the three months to the end of January.

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Adzuna said the average starting salary – which employers only published for just under half of positions advertised – was 38,168 pounds ($48,450), 3.0pc more than a year earlier. 

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WTO ministers gather in UAE for talks amid geopolitical tensions

WTO ministers gather in UAE for talks amid geopolitical tensions

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WTO ministers gather in UAE for talks amid geopolitical tensions

 The world’s trade ministers gathered in the UAE on Monday for a high-level WTO meeting with no clear prospects for breakthroughs, amid geopolitical tensions and disagreements.

The World Trade Organisation’s 13th ministerial conference (MC13), scheduled to run until Thursday in Abu Dhabi, the capital of the United Arab Emirates, is the first in two years.

The WTO is hoping for progress, particularly on fishing, agriculture and electronic commerce.

But big deals are unlikely as the body’s rules require full consensus among all 164 member states — a tall order in the current climate.

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“I don’t have hopes that a very substantive agreement will be announced,” said Marcelo Olarreaga, Professor of Economics at the University of Geneva.

“My impression is that the negotiators are dealing with tactical positions – how to make it look like it is the other (side) who is blocking negotiations,” he told AFP.

Even WTO Director-General Ngozi Okonjo-Iweala has said she expects the meeting to be challenging due to the “economic and political headwinds” – from the war in Ukraine, attacks in the Red Sea, inflation, rising food prices and economic difficulties in Europe and China.

Her team is working around the clock to draft agreements for the talks, she told journalists this month, noting that “negotiating positions are still quite tough”, notably on agriculture.

‘Miracle’

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During the WTO’s last ministerial meeting, held at its Geneva headquarters in June 2022, trade ministers nailed down a historic deal banning fisheries subsidies harmful to marine life and agreed to a temporary patent waiver for Covid-19 vaccines.

They also committed themselves to re-establishing a dispute settlement system which Washington had brought to a grinding halt in 2019 after years of blocking the appointment of new judges to the WTO’s appeals court.

“Replicating the success, the miracle, of MC12 in 2022 will be extremely challenging,” European Trade Commissioner Valdis Dombrovskis said this month.

“Negotiations on the big-ticket items” – such as fisheries, agriculture and the e-commerce moratorium – will “remain open until the final phase of the conference”, he added.

“Negotiations on dispute settlement reform and potentially some parts of the outcome document will also be challenging.”

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However, the WTO faces pressure to eke out progress on reform in Abu Dhabi ahead of the possible re-election of Donald Trump as US president.

During his four years in office from 2017 to 2021, Trump threatened to pull the United States out of the trade body and disrupted its ability to settle disputes.

“There will be the US elections in November…so this is the last chance,” a diplomatic source in Geneva told AFP on condition of anonymity.

“Postponing anything until after MC13 is not a good strategy.”

Earlier this month, US Trade Representative Katherine Tai underlined Washington’s “commitment to reforming the WTO and creating a more durable multilateral trading system”.

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But Olarreaga of the University of Geneva said the other members of the WTO “cannot expect huge concessions” from the administration of US President Joe Biden in an election year.

‘Fragmentation’

While there is doubt over progress at the WTO on major issues such as agriculture, there is hope for small advances on other fronts, particularly aid for developing countries.

On Monday, two new countries, the Comoros and East Timor, are expected to be accepted as WTO members.

More than 120 countries and regions, including China and the European Union, but not the United States, issued a ministerial declaration early Monday, marking the finalisation of an agreement aimed at facilitating international investments in development.

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They also issued a submission requesting the official integration of the deal into the WTO, but some diplomats fear opposition from India, which rejects any agreement that does not include all member states.

But amid the difficulty of obtaining full consensus, more and more plurilateral agreements — deals with a narrower number of signatories — are being reached, applying only to the participating countries.

Adding to the challenges for those gathering in the UAE, is the ongoing war in Gaza and related attacks by Yemeni rebels on ships in the Red Sea, a campaign that has disrupted global maritime trade.

“The current situation is characterised by geopolitical tensions,” said a European diplomat who spoke to AFP on the condition of anonymity.

“High expectations from developing nations following the financial crisis and the Covid-19 pandemic, as well as economic tensions due to inflation… (add to the) risk of fragmentation of the global economy,” the diplomat said. 

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Gas in oil-rich Saudi Arabia: Another 15tr cubic feet of reserves proven at Jafurah field

Gas in oil-rich Saudi Arabia: Another 15tr cubic feet of reserves proven at Jafurah field

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Gas in oil-rich Saudi Arabia: Another 15tr cubic feet of reserves proven at Jafurah field

An additional 15 trillion standard cubic feet of gas have been proven at Saudi state oil company Aramco’s Jafurah gas field, Energy Minister Prince Abdulaziz bin Salman said on Sunday.

Reserves at Jafurah have reached 229 trillion cubic feet of gas and 75 billion barrels of condensates, Prince Abdulaziz said in a statement on state news agency SPA.

Saudi Arabia is working on developing its unconventional gas reserves, which require advanced extraction methods such as those used in the shale gas industry.

Jafurah is the kingdom’s largest unconventional non-oil associated gas field and it is potentially the biggest shale gas development outside of the United States.

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In 2020, the Jafurah field was estimated to require investments of $110 billion.

Saudi Aramco expects output to reach 420 million cubic feet per day of ethane by 2030, it said on its website. The Jafurah field would produce some 630,000 barrels per day of gas liquids and condensates by 2030, it said.

The news comes as Qatar announced further raising gas production despite a steep drop in global gas prices, pushing ahead with plans to extract more of the resource amidst fierce competition with rivals such as the United States.

Read more: Qatar gas production increase is coming amid collapsing LNG prices

QatarEnergy chief Saad al-Kaabi shared the details of a new expansion of its liquefied natural gas production that will add a further 16 million tonnes per annum (mtpa) to existing expansion plans, bringing total capacity to 142 mtpa.

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The Qatari announcement comes as US gas prices trade near an all-time low if adjusted to inflation after a decade of meteoric rises in output which made the US one of the top oil and gas exporters.

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