KARACHI, May 24: The meeting between the Ministry of Finance, headed by Federal Finance Minister Abdul Hafeez Sheikh and the Pakistan Business Council (PBC) in Islamabad on Monday and Tuesday focused on several matters of interest and concern to the business community.

The Capital Gains Tax on stocks--mainly the methodology of its collection came under consideration and also issues relating to the turnaround and privatisation of state-owned enterprises (SOEs).

A third round of the marathon consultations would be held in the next few days.

Sitting on the PBC side of the table were also the chairman KSE Munir Kamal and market expert/ broker Arif Habib and Aqeel Karim Dhedhi.

Earlier on Monday, the delegation had met the President, Asif Ali Zardari.

From the stock exchange point of view, the burning issue was the CGT, which the business/brokers pointed out was unable to generate required revenue for the government, but was the principal factor in depleting volumes at the market.

A member present at the meeting said that it was emphasised that the method of collecting CGT had raised concerns among small investors.

Instead of the CGT, the revival of withholding tax at 0.02 per cent on trading was recommended to the government.

In the earlier meeting with the President on Monday, a member said that the President had directed the Finance Ministry to review the matter.

Other than that, the government was anxious to revitalise the ailing public sector units. The ministry proposed to hand over management control of such sick state-owned enterprises (SOEs) to a consortium of private parties, which could push to turnaround and wipe the red off their balance sheets. The units could then be offered for privatisation. In respect of SOEs—both sick and healthy—four proposals were laid on the table for discussion: One to hand over the management through contracts; two to privatise (units like SLIC etc); three to list on the stock exchanges and four to divest more of government-held equity in blue chip companies, such as PPL, OGDC and others.

It was agreed that subsidies provided to worthless units should be withdrawn.

The KSE side also asked for 15 per cent tax rebate for five years to new companies that enter the capital market for listing and a cut in tax rate for listed companies that distribute 50 per cent or more of their yearly profit in dividends to shareholders.