ISLAMABAD, June 18: The Association of Certified Chartered Accountants Pakistan (ACCAP) has termed the budget 2008-09 as a positive step towards a more equitable Pakistan.

The association in a statement issued here on Wednesday commended the fixing of minimum wage at Rs6,000 from Rs4,600, 20 per cent hike in pension and raise in income tax exemption for salaried persons.

It further said that the introduction of marginal tax relief would not only give relief to salaried individuals but it was also a step towards fairness in the taxation system.

However, the association felt that the one per cent increase in sales tax at 16 per cent would further escalate the inflationary pressures.

It said that the progressive tax slab rate offered to small companies, whose turnover exceeds Rs250m, would encourage local investment and the application of withholding tax rate of 2 per cent instead of 5 to commercial importers would lower the cost of doing business.

“Abolition of minimum tax on declared turnover at 0.5 per cent is another step towards fairness of taxation system compared to the earlier system where companies incurring losses or with low profits had to pay turnover tax,” it observes.

It appreciated the imposition of tax on builders and developers and said it would widen the tax base.

The association said the First Year Allowance (FYA) offered at 90 per cent of the cost of plant, machinery and equipment for industrial setup in rural and underdeveloped areas would result in economic development of the downtrodden.

It said that the imposition of 10 per cent tax on transfer of after-tax-profit or dividend by a foreign company out of Pakistan may have a negative impact on foreign direct investment.

Similarly, the government’s decision to exempt stock markets from capital gains tax would result in the continuity in speculative trading and relieving a profitable sector of economy from taxation.