Pak system neither presidential nor parliamentary: PM

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani Sunday said the prevalent system in the country is hotchpotch of systems, terming it neither parliamentary nor presidential, in response to a query by a student.Addressing the ceremony of convocation of International Islamic University, he said the constitutional reforms are being effected in the constitution, vowing to restore the 1973 constitution after introducing proper amendments in it.‘We believe in democracy and there is no restriction on media in the country,’ he added saying the government will not slap any constraint on media.“We believe in freedom and democracy.”He said if all the institutions function properly, there could not be any clash.‘It is only Education with which the problems facing the nation could be braved.’The real reason behind extremism and terrorism is lack of education, Gilani said adding the extremists are working on foreign agenda and foreign powers are employing them for their ulterior motives.The PM Gilani said the stable Afghanistan is in the interest of Pakistan; therefore, we will make efforts for stability there.

SC verdict: govt in daze to fill Rs122bn gap

ISLAMABAD: The Supreme Court’s interim order to suspend the imposition of carbon surcharge on petroleum products has put the IMF programme of $7.6 billion loan at stake because the government will have to find ways and means to fill the revenue gap of Rs122 billion during the fiscal year 2009-10. Not filling this gap would mean increasing fiscal deficit by almost 0.8 per cent of the GDP, jacking it up to 5.7% from the existing target of 4.9%, which the IMF will not allow at any cost.“It is not possible to stick to the budgetary measures for fiscal 2009-10 if carbon surcharge is not to be collected. So all budgetary targets will have to be revised,” a senior official of the finance ministry said while talking to The News on phone from abroad soon after the announcement of interim order issued by the Supreme Court on Tuesday.When contacted for comments, Minister of State for Finance and Economic Affairs, Hina Rabbani Khar said that obviously the government could not raise question on the order announced by the Supreme Court but at the same time opined that it was an interim order.She admitted that it would put the government in a difficult situation because there are few alternatives to fill this huge gap of Rs122 billion. The options are limited to cutting down on the Public Sector Development Programme (PSDP) or printing more notes, which will be inflationary, she added. Acting Secretary Finance Ayub Tarin along with OGRA high-ups will submit the government viewpoint before the apex court tomorrow (Thursday), she added. She said the expenditures for running the government increased by 3 percent in the budget 2009-10 compared to revised estimates for 2008-09.Defending the imposition of carbon surcharge, she said that the government introduced transparent mechanism and the prices of POL products might have come down next month keeping in view the declining trend in international market. Another finance ministry official was of the view that the IMF considers the fiscal deficit target as sacrosanct and any deviation from the set target might put the whole programme in jeopardy. The $7.6 billion IMF programme has envisaged 4.9 per cent fiscal deficit target for 2009-10 and the suspension of carbon surcharge will create a huge gap of Rs122 billion, which will not be possible to fill either by reducing expenditures or increasing revenues. During the budget-making exercise, the finance ministry officials has expressed apprehensions that the Supreme Court might even block the Petroleum Development Levy (PDL) because the government continued to charge this amount from the masses on the basis of an ordinance promulgated in 1961. “The double taxation such as sales tax as well as PDL was considered the most difficult issue to be defended before the Supreme Court,” said an official. He said the government by imposing fixed carbon surcharge tried to achieve two objectives: to ensure uninterrupted stream of revenue and to achieve parliament’s support. It was the view of the budget-makers that with carbon surcharge becoming part of the budget, the Supreme Court would not block the way of the government to generate Rs122 billion in the fiscal year 2009-10.

suspends carbon surcharge

ISLAMABAD: The government was made to fret over the fiscal impact while the masses went into a celebratory mode hoping for a permanent relief when the Supreme Court in its interim order on Tuesday suspended the imposition of carbon tax on petroleum products and directed the Oil and Gas Regulatory Authority (Ogra) to issue a notification by Wednesday, suspending the tax till the final decision on the petitions. As a result, petrol and diesel prices are expected to come down by Rs10 and Rs8 per litre, respectively. Kerosene oil will become cheaper by Rs6 per litre. A three-member, bench of the Supreme Court comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Chaudhry Ijaz Ahmed and Justice Shahid Mahmood Akhtar Siddiqui, is hearing the petitions filed by PML-N Secretary General Iqbal Zafar Jhagra and Senator Rukhsana Zuberi of the Pakistan People’s Party, challenging the recent hike in the prices of petroleum products.The court ordered cancellation of the notification issued on June 30 regarding the imposition of carbon tax and directed the Ogra to stop charging the tax until the court concludes hearing. The court also directed the secretary, ministry of environment, to appear before the court on July 9 along with the summary, if any, forwarded to the government demanding funds for projects aimed at provision of pollution-free environment for which the government had to impose carbon surcharge. The apex court directed Ogra to issue a notification suspending the carbon tax on petroleum products, which must be applicable from today, July 8. Advocate Muhammad Ikram Chaudhry, counsel for PML-N Secretary General Iqbal Zafar Jhagra, Khwaja Saeed Zafar, counsel for Ogra, Attorney General Latif Khosa, the secretary petroleum and representatives of Ogra and Senator Rukhsana Zuberi, one of the petitioners, appeared before the court in person. Muhammad Ikram Chaudhry advocate submitted that a barrel of crude oil produces 35 litres of diesel and 27.5 litres of petrol. “Assuming that the price of crude oil is US$70 per barrel on the international market, the government roughly earns a profit of Rs1050 from only these two extracts of crude oil”, he contended.He further submitted that the government had produced no documents to show that the imposition of carbon surcharge was necessary. The learned counsel argued that the government was charging sales tax on every component of petroleum products, which, he said, was against the provisions of the Constitution.Counsel for Ogra Khawaja Saeed submitted that the government had replaced petroleum development levy with carbon surcharge and that increase in the prices of petroleum products was due to their increasing prices on international markets.The court directed counsel for Ogra to provide in writing the break-up of the components of the prices of petrol, diesel and kerosene oil, as on June 30 and July 1. According to the break-up provided by Ogra, price of petrol on June 30 stood at Rs56.21 per litre including ex-refinery price of Rs31.91, petroleum development levy (PDL) Rs10.54, sales tax Rs7.75, oil marketing companies’ margin Rs1.39, dealers’ margin Rs1.74 and inland freight Rs2.38.On July 1, it was raised to Rs62.13 per litre including ex-refinery price of Rs36.59, carbon surcharge Rs10, sales tax Rs8.57, oil marketing companies’ margin Rs1.60, dealers’ margin Rs2.00 and inland freight Rs3.37, Khawaja Saeed submitted.Similarly, per litre price of diesel on June 30 was Rs55.71 including ex-refinery price of Rs34.78, PDL Rs8.53, sales tax Rs7.68, oil marketing companies’ margin Rs1.35, dealers’ margin Rs1.50 and inland freight Rs2.22, while on July 1, the product was sold at Rs62.65 including the ex-refinery price of Rs40.94, carbon surcharge Rs8, sales tax Rs8.64, oil marketing companies’ margin Rs1.35 dealers’ margin Rs1.50 and inland freight Rs2.22, counsel for Ogra said. He further stated that price of kerosene oil per litre stood at Rs51.87 on June 30 including ex-refinery price of Rs32.77, PDL Rs6.88, sales tax Rs7.15, oil marketing companies’ margin Rs1.74, inland freight Rs3.61 while dealers were given no margin. On July 1, the price of the product was hiked to Rs59.35 including the ex-refinery price Rs39.26, carbon surcharge Rs6, sales tax Rs8.19, oil marketing companies’ margin Rs1.72 and inland freight Rs4.16.The Supreme Court observed that the statement showed that in fact ex-refinery prices and sales tax ratio had been increased on petroleum products. Attorney General Sardar Latif Khosa submitted that the government had to increase the prices due to increase in the prices of petroleum products on international markets and for running the affairs of the country in the wake of budget deficit.The court, however, wanted to know the reason behind the imposition of carbon surcharge. “Has the ministry of environment forwarded any summary demanding funds for projects for the improvement of environment for which the government was compelled to impose carbon surcharge?” Justice Mehmood Akhtar Siddiqui enquired. “Where from the proposal for the imposition of carbon surcharge came?” the court asked.The attorney general informed the court that the cabinet had taken the decision in the financial bill for the year 2009-10.The court, however, observed that it was of the opinion that there was no immediate need for the imposition of carbon surcharge instead of the petroleum development levy. The court observed that it was necessary to examine whether the ministry of environment had demanded any amount for provision of pollution-free environment.Earlier at the start of the hearing of the case, the chief justice opened the envelope in the court containing report submitted by the commission headed by Justice (retd) Bhagwandas regarding the price mechanism of petroleum prices. The chief justice directed the parties to get copies of the said report from the registrar of the apex court and the court would take it up on July 9 during the hearing of the case.