Development of a Global Constitution

Understanding a Constitution
A constitution is a system for government which defines the fundamental political principles, and establishes the structure, procedures, powers and duties, of a government. The term constitution can be applied to any overall law that defines the functioning of a government.

Constitution of the United States of America
The Constitution of the United States of America is the supreme law of the United States. It provides the framework for the organization of the United States Government. It also reserves numerous rights for the individual states, thereby establishing the United States’ federal system of government. The way the Constitution is understood is also influenced by the decisions of the court system, and especially the Supreme Court. These decisions are referred to, collectively, as precedents.

Constitution in Europe
The Treaty establishing a Constitution for Europe (TCE), commonly referred to as the European Constitution, was an international treaty intended to create a constitution for the European Union. It was signed in 2004 by representatives of the then 25 member states of the European Union and needed to be ratified by all member states to enter into force. 13 member states completed the ratification procedure, but the rejection of the Constitution by French and Dutch voters in May and June 2005, called the future of the Constitution into question. In light of these developments three member states, Finland, Germany and Slovakia, abandoned their partially complete ratification procedures and a further seven member states indefinitely postponed consideration.
Following the period of reflection, the European Council meeting in June 2007 decided to start negotiations on a Reform Treaty as a replacement and from this date the Treaty for Constitution for Europe still needs to be finalized.

Constitution of Pakistan
The Constitution of Pakistan is the supreme law of Pakistan. There have been several documents known as the Constitution of Pakistan. The Constitution of 1973 is the existing constitution, which provides for a parliamentary system with a President as head of state and popularly elected Prime Minister as head of government.

The Constitution (Seventeenth Amendment) Act, 2003 was an amendment to the Constitution of Pakistan passed in December 2003 according to which the President regains the authority to dissolve the National Assembly and dismiss the Pakistani Prime Minister, but the power to do so is made subject to an approval or veto by the Supreme Court of Pakistan.

Role of a Constitution
Please discuss the role of a constitution today and what you believe should be included in a global constitution that can be applicable to all countries of the world. Please state the exact categories that the constitution should cover and your suggested framework for its implementation in all countries.

The Tax on Consumer Goods

An indirect tax, such as sales tax, value added tax (VAT), or goods and services tax (GST)) is a tax collected by an intermediary, such as a retail store from the person who bears the ultimate economic burden of the tax, such as the buyer of the consumer goods. An indirect tax may increase the price of a good so that consumers are actually paying the tax by paying more for the products. Examples would be tax on fuel, liquor, and cigarettes. Thus, an indirect tax is such which can be shifted or passed on, and invariably, the end customer has to bear the burden.

Tax is high on the agenda for retail and consumer goods companies. Increasingly retail and consumer companies are focusing on maximizing value from their brands as part of strategic reviews of their businesses. Tax is an important part of this review. Key tax issues for retail and consumer goods companies span insurance issues and which includes a global product liability and recall team.

Some people feel excise taxes can achieve social goals such as lowering consumption of alcohol. The consumers can avoid taxes by avoiding consumption, but this is not the solution. These taxes are regressive, which means that everyone pays the same dollar amount regardless of wealth. The taxes on necessities such as utilities and gasoline impose a much heavier burden on the poor.

Goods and Services Tax (GST)
It is a consumption tax levied on value added. In contrast to sales tax, VAT is neutral with respect to the number of passages that there are between the producer and the final consumer; where sales tax is levied on total value at each stage, the result is a cascade (downstream taxes levied on upstream taxes). Value added taxation has been gaining favour over traditional sales taxes worldwide. In principle, value added taxes apply to all commercial activities involving the production and distribution of goods and the provision of services. VAT is assessed and collected on the value added to goods in each business transaction. Under this concept the government is paid tax on the gross margin of each transaction. Revenues from a value added tax are frequently lower than expected because they are difficult and costly to administer and collect. In many countries, however, where collection of personal income taxes and corporate profit taxes has been historically weak, VAT collection has been more successful than other types of taxes.

Effect of Tax on Consumer Goods
Goods and Service Tax is a tax on goods and services, which is leviable at each point of sale or provision of service, in which at the time of sale of goods or providing the services the seller or service provider can claim the input credit of tax which he has paid while purchasing the goods or procuring the service. The sellers or service providers collect the tax from their customer, who may or may not be the ultimate customer, and before depositing the same to the exchequer, they deduct the tax they have already paid. The net effect is that dealers charge GST but do not keep it, and pay GST but get a credit for it. This means that they act essentially as collecting agents for the Government. The ultimate burden of the tax falls on the last and final consumer of the goods and services, as this person gets no credit for the GST paid by him to his sellers or service providers.

Please post your comments below on
(a) The current systems for VAT collection and how they can be improved.
(b) What standard legal structure should be for such systems, and
(c) How should such a system be developed in light of increasing cross-trading of consumer goods between different countries and between consumers themselves.

Taxation in Pakistan

Any income received or accrued or deemed to be received from any source is liable to tax in Pakistan. However, income remitted to Pakistan by resident companies, non-resident companies and non-resident individuals is exempted from tax. Any activity is taxable which involves the supply of goods or rendering of services on which sales tax has been levied and which is carried on in the form of a business, trade or manufacturing concern.

The tax year in Pakistan is a period of twelve months ending on the 30th day of June. The taxes on incomes, sales, central excise and customs’ duty are charged on the Federal level. Income from agriculture is charged on a Provincial level. The Federal laws and rules covering taxes and duties are enforced by the Central Board of Revenue, and are as follows:

  • (a)Income Tax Ordinance of 2001 & Income Tax Rules of 2002
  • (b)Sales Tax Act, 1990 and Rules issued there under.
  • (c)Central Excise Act of 1944 and Central Excise Rules of 1944
  • (d)Customs Act, 1969 & Pakistan Customs Tariff

Pakistan has recently undergone major reforms in the taxation structure, in an effort to make the taxation procedures more comprehensible for the average Pakistanis. These have been undertaken by the Central Board of Revenue (CBR) on five levels:

  1. Management and Institutional Development: Managing Organizational Change, Internal Affairs and Vigilance Function, Training, Improving Professional Ethics
  2. Improving Revenue Operations: Direct Taxes, Sales Tax, Customs
  3. Strengthening Revenue Services: Establishing Audit Function, Establishing Collection & Enforcement Function, Establishing Custom and Tax Fraud Function
  4. Tax Compliance Culture: Establishing Taxpayers Identification, Registration, Return Processing and Accounts Function, Establishing Facilitation and Tax Education Function, Impact Evaluation, Quality Assurance and Monitoring
  5. Adopting Responsive IT Systems: Direct Tax Information System, Sales Tax Information System, Customs Information system

A universal self-assessment system is in place, in which one must declare his/her income and determine his/her tax liability himself. I.T. services have been leveraged to provide the population with online tax calculations and information regarding the taxation is made available online along with correspondence facilities.

The Real Estate framework of Pakistan

The Government of Pakistan has a comprehensive legal framework in place to protect the rights of real estate owners. There are ample policies and laws that govern the sale and purchase of property in the country. Apart from federal legislation, there are local laws and legal frameworks which determine the sale, purchase and rental of real estate in different parts of the country. There is legal documentation required for the right to entitlement of land and property in the country and this includes:

  1. For Real Estate Transfers including sale and purchase, the seller and buyer must fulfill mandatory legal documentation including Statute of Frauds & Part Performance, Title to Be Conveyed, Deeds, Land Descriptions, Settlement Agreement, Listing Contract, Conditions in Contracts, Delivery & Escrow and others depending on the nature of property.
  2. For Real Estate Development, legal documentation includes Purchase Money Land Financing document, Mechanics Liens, Construction Loans & Other Mortgages to Secure Future Advances, Coop Apts, Conversion of Rental Housing to Condos & Coops, Planning Permission and others varying according to the nature of development.
Real Estate Law

Real Estate Law

The Pakistani Government has measures, like the DC rate list, for controlling the prices of real estate. The DC rate list is a table prepared under the authority of the Stamp Act, which is a tax statute that levies a charge on transactions based on the value of the transaction.

The Government of Pakistan has taken several initiatives to improve the real estate sector in the country. The House Building Finance Corporation (HBFC) is the Statutory Federal Body that provides financial assistance for construction and purchase of houses to the people of Pakistan in urban as well as rural areas. The National Housing Authority (NHA) was established with the primary objective of preparing short and long terms plans and policy guidelines and mobilizing financing resources for development of housing for low income groups.

The government has included the real estate sector among the drivers of the country’s economic  growth. A number of measures have been adopted to grow the housing and construction sector:

  1. Elimination of excise duty on paints.
  2. Significant reduction in the duties of a number of building materials including steel and its products.
  3. Significant reduction in the duty on imported machinery for construction sector together with exemption from the levy of sales tax and withholding income tax.

All banks have begun lending for housing sector and with further improvement in the building regulations and administration and quick settlement of disputes in courts, banks will be further encouraged to lend for real estates. With the help of provincial governments all records of building authorities and societies will be computerized and public disclosure will be made of ownership of properties so that consumers can enter into real estate transactions without fear of misrepresentation and fraud.

Real estate deal-making involves a multitude of choices in terms of how specific transaction elements are prioritized, addressed, implemented. Just as each property is unique, so is each transaction involved with it. Indeed, very different approaches and outcomes can result from different participants’ interactions with the identical real estate interests.