KARACHI - The Directors of Karachi stock exchange are going to meet with the economic reform committee on Sunday at Karachi to discuss the controversial capital gain tax issue and the current steps taken by the State Bank of Pakistan. The directors will discuss the issues and intimate the committee with their reservations regarding the expected imposition of capital gain tax and steps taken by the state bank of Pakistan on Thursday. Sources said that directors of the KSE will put forward all their suggestions in front of economic committee pertaining to the CGT, its impact on stock market and latest moves of SBP. Sources said that directors will try to bring round the economic committee to extend the exemption period of CGT but they added that directors were not optimistic about the exemption of CGT after the statement of the CBR chairman regarding the CGT, who had announced to impose capital gain tax. Sources said that in the meeting all proposals, which have been sent by the KSE to the economic reform committee, will be highlighted, in which issues, that are hampering the performance of stock market had been mentioned. In their proposals KSE has identified the other means of taxation that the stock market is currently paying in the shape of CVT and with holding tax. The rumors of imposition of CGT are floating on the stock market, which is believed to be the partly responsible for the weak sentiments witnessed on the KSE-100 index, resultantly benchmark index lost more than 1,600 points in last 15 trading sessions. The directors believed that the imposition of CGT will affect the market. Analysts said that in the short term imposition of CGT could adversely affect investment both through a misallocation of capital and a negative psychological barrier to new investment. Concurrently, it would simulate tax avoidance activity as well. The largest hurdle by far in most emerging markets is the administrative problems involved in actual implementation of capital gains tax. They said that this issue is not to be taken lightly especially when Pakistan is trying to attract significant amounts of foreign and domestic investment. Maheen Rahman head of research at BMA said that "There are several arguments for and against tax imposition; either way it will be some time before asset markets and investors fully understand the implications and mechanisms of the tax.