KARACHI, June 16: The Sindh government has withdrawn stamp duty of 0.1 per cent on the par value of each electronically transferred share in the stock exchange, Chief Minister Syed Qaim Ali Shah announced in his budget speech on Monday.

Stock operators had already made a big gain early this month when the federal government extended a moratorium for two more years from capital gains tax. Within days after this gain, the chief minister announced on Monday doing away with stamp duty of 0.1 per cent enacted through finance bill 2006.

Stock exchange operators were upset and furious on the levy of this nominal stamp duty on the electronic transfer of shares for which the Central Depository Company (CDC) was asked to recover the stamp duty and there were marathon sessions with the then Sindh government adviser on finance M. A. Jaleel, who took a firm stand and refused to budge.

“The management of Karachi Stock Exchange had reservations on this levy,” the chief minister recalled in his budget speech and announced to do away with this stamp duty for further development of capital market. “This is being foregone to encourage local and foreign direct and portfolio investment,” he added.

Stamp duty collection amounted to Rs3.76 billion in 2006-07. It increased to Rs4.50 billion in 2007-08 and is being projected at Rs6 billion in the current budget of 2008-09. However, the Sindh budget documents do not give any breakdown of stamp duty collection to show how much stock exchange transactions contributed.

While giving all concessions and incentives to the speculative traders of stock exchange, the Sindh chief minister in his budget speech announced a 0.3 per cent increase in infrastructure cess from existing 0.5 per cent of cost and freight (C&F) value of imported cargo.

“It is now proposed to enhance the rate of the cess by 0.3 per cent on various slabs of the imports to facilitate additional funds to the government to meet the cost of maintenance of infrastructure in the province.

Infrastructure cess was levied during the PPP government in 1994 for meeting the cost of wear and tear of the infrastructure due to heavy traffic of the goods entering the province by air or sea.

A cursory glance of Sindh budget documents shows that the landed gentry, too, enjoy “concessions and incentives” in taxation. The recovery of tax on agricultural income during 2006-07 has been shown at Rs158.20 million in 2006-07, which has been rounded to Rs200 million in 2007-08 as against the original target of Rs400 million. In 2008-09 the big landlords are expected to contribute Rs350 million.