Treasury and opposition members made hard-hitting speeches against the inflationary measures included in the supplementary finance bill, but the committee eventually embraced the draft law, requisite to unlock financing from the International Monetary Fund (IMF).
By Naveed Naqvi
ISLAMABAD: Senate Standing Committee on Finance Thursday gave its nod to the government’s bid to put a stalled International Monetary Fund (IMF) bailout back on the rails by approving a draft law to enable more revenue collection to balance the budget.
The government of Prime Minister Shehbaz Sharif was forced to table the Supplementary Finance Bill, 2023, for parliamentary approval after President Arif Alvi declined to enact it as a presidential decree.
A Pakistan Tehreek-e-Insaf (PTI) nominee, Alvi clearly remains wedded to the vision of former Prime Minister Imran Khan, who was ousted from power by the Pakistan Democratic Movement (PDM) coalition in April 2022 in a constitutionally sacrosanct vote of no confidence.
The Finance (Supplementary) Bill 2023 laid in the House on February 15, 2023 brings about an increase in the general sales tax from 17 to 18 percent besides increasing the Federal Exercise duty on sugary items, tobacco, airline tickets, marriage halls, and cement.
Chaired by Senator Saleem Mandviwalla, Senate Standing Committee on Finance approved the bill after two sittings characterised by hard-hitting speeches from both opposition and treasury members.
As the Committee deliberated over the recommendations on Money Bill, the members lamented how the crushed the common Pakistani already is under historic high inflation, and how cumbersome the new taxation measures promise to be.
PTI’s Senator Mohsin Aziz maintained the magnitude of new taxation under the Bill calculated to PKR 520 billion and not PKR 170 billion as the government claims.
On this occasion, Chairman FBR, Asim Ahmed while briefing the meeting on the Bill said that taxes of PKR 170 billion have been imposed through the minibudget, which will be collected in the next 4 and a half months. The purpose of the additional taxes is to balance the budget for the current fiscal year, ending June 30, 2023.
Mandviwalla said the Aviation Ministry has written a letter to the Committee and expressed reservations on 20 percent tax on business class and first class tickets. Aviation ministry commented that the proposed tax is not workable because the fare of tickets are not static and vary from time to time.
Senator Saleem Mandviwalla suggested that instead of imposing 20 percent tax, a definite amount should be fixed for each destination.
The Senate body was informed that the ministry of finance and revenue has increased the GST from 17 to 18 percent on products bearing retail price.
Asim Ahmad, Chairman FBR, stated that FBR was not empowered earlier to increase sales tax on these items and that’s why ministry put forward this bill which results in empowering the FBR to increase tax on items bearing retail price.
Senator Saadia Abbasi rejected this provision of the Bill. Moreover, the Chairman Committee apprised that the sales tax on cellular devices worth USD 200 to USD 500 have been increased from 17 percent to 18 percent, and the sales tax on cellular devices exceeding USD 500 have been increased from 17 to 25 percent.
Senator Mohsin Aziz suggested a ban rather than increased taxes on luxury imports, maintaining the higher tax rates would encourage smuggling of these items.
State Minister for Finance and Revenue Dr Aisha Ghaus Pasha countered that WTO prohibited banning imports, and that as far as smuggling of these luxury items is concerned, the FBR is working in collaboration with Frontier Corps and other agencies to curb the smuggling of said items along the western border.
Representatives of Murree Brewery and Shezan Enterprises apprised the Committee that the government has increased Federal Excise Duty (FED) on sugary fruit juices and squashes from 0 percent to 10 percent and this sudden increase is not justifiable.
Chairman FBR commented that sugary drinks are injurious to health and owing to WHO recommendations in this regard, the government has increased the FED on carbonated water from 13 percent to 20 percent. The Committee recommended that FED on sugary drinks juices should be decreased from 10 to 5 percent.
The Committee heard that the government has increased tax per thousand cigarettes from PKR 6,500 to PKR 16,500 to curtail the usage of tobacco as per global practice; and the FED on per kilogram of cement has been increased from PKR 1.5 to PKR 2.
While discussing the proposed tax on functions and gatherings, Chairman FBR apprised that the individuals have to pay 10 percent tax in advance in order to avail the services of banquet halls.
Committee chair Mandviwalla remarked that the majority of banquet halls are not even registered with the FBR. He said the government should try and register such establishments before imposing the tax.
Senator Saleem Mandviwalla reiterated that this bill will only burden the tax-paying masses of the country. He proposed that government should take measures to bring the non-taxpayers under the ambit of the FBR.
The meeting was attended by Senator Saadia Abbasi, Senator Dilawar Khan, State Minister for Finance and Revenue Aisha Ghaus Pasha, Chairman FBR Asim Ahmad and other senior officers of relevant departments.
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