ISLAMABAD, May 31: The federal government has been proposed to retain only three major taxes and abolish all other provincial taxes and their related departments in order to promote local and foreign investment.

Official sources told Dawn here on Monday that the ministries of privatization and investment, industries & production, Board of Investment (BoI) and major business bodies including the Federation of Chamber of Commerce and Industry (FPCCI) have proposed that only income tax, sales tax and import duty be retained in the budget for 2004-05.

They said that all the provincial tax departments should be abolished and that the federal government should be responsible to collect taxes throughout the country. In this behalf, it was proposed to urgently streamline and restructure the Central Board of Revenue (CBR) so that it could become a very effective and friendly tax collection agency.

Sources said that a proposal was also given that either the federal and provincial labour ministries and departments should be done away with or a highly simplified small agency should be created to deal with the labour issues. "The purpose is that labour departments should not harass the investors", said a senior government official.

When contacted he said that Pakistan would continue to have low investment especially the Foreign Direct Investment (FDI) in the presence of a number of federal and provincial taxes as well as labour departments. "These labour departments are in fact causing a lot of problems for the investors and that is why they are not ready to invest", he said.

He said it was good to see that the announcement of the federal budget has been delayed till June 12 which would now help to further discuss and incorporate some of the important recommendations in the new budget.

Another official said that the recommendations of the Prime Minister's Task Force on Poverty and Employment Generation would be presented to the prime minister in a day or so that some relief could be offered to the poorer classes of the country in the new budget.

"The prime minister has agreed to have our report on poverty very shortly so that some institutional framework could be worked out for offering certain relief to the poorer segments of the society", he said.

Similarly, he said that it has been decided to develop some "specific instruments" to address the issue of poverty. "We all are only talking about removing poverty but the fact of the matter is that nobody seems to be serious about this very important issue", the official said.