Senate Standing Committee on Finance met the second consecutive day with Senator Talha Mahmood in the chair to finalise and make recommendations in the Finance (Supplementary) Bill, 2021.
The Federal Board of Revenue (FBR) sought the right from the committee to impose sales tax on the retail prices of all commodities.
It is worth mentioning that under the verdict, rules do not empower the executive to enact legislative measures; such power can only be exercised through subordinate legislation.
Meanwhile, a representative from the Ministry of Law told the committee that FBR’s request could be approved if the federal government and parliament granted permission to a federal body.
During the session, FBR Chairman Dr Muhammad Ashfaq Ahmed informed the committee regarding the new amendment’s point of sale (POS), saying it would be applied to shops less than 1,000 square yards.
Senator Faisal Sabzwari objected to this proposal and questioned the FBR chairman as to why the proposal was not mentioned before.
The FBR official, however, clarified that this step was being taken to increase taxes.
Senator Saleem Mandviwala, while endorsing Sabzwari’s views, said that the move would create turmoil in the market, adding that this system was introduced only six months ago, therefore, no amendment should be made based on this.
Taking all discussion into notice, the chairman committee decided to postpone the proposal till next year’s budget.
Speaking during the session, the FBR chairman said that the authorities were trying that this becomes the ‘last programme’ of the International Monetary Fund (IMF).
Ahmed said that after every two years, IMF ordered Pakistan to fix its tax system; however, from July 1 onwards, “we will have an active and unified tax system in the country.”
“We are trying to fix the flaws in our tax system,” the FBR chairman said and further urged the parliamentarians to provide suggestions to increase the revenue of the state.
Replying to FBR’s defence, Pakistan Peoples Party (PPP) leader Farooq H Naek said that the parliamentarians tried to strike a balance between the state and the people.
“The government is not raising direct tax collections,” he said, adding that instead it was burdening the common man through indirect taxes.
The members of the committee expressed frustration over the absence of the Federal Minister for Finance and Revenue Shaukat Tarin during the session.
Senator Musadik Masood Malik told the panel that those who introduced the supplementary finance bill were absent from the meeting.
He accused the FBR chairman of subtly calling politicians corrupt, to which Senator Zeeshan Khanzada said that if this has happened then the members should protest together.
The committee members rejected the proposal to abolish tax exemption on matchsticks. Moreover, the body also rejected the proposal to impose a 17 percent sales tax on the jewellery industry (gold, diamond jewellery and jewellers).
It was highlighted by the FBR during the session that the demand for gold in the country is around 160 tons.
Senator Mehmood stated that 80 tonnes of gold were being smuggled and imported illegally.
The officials from the Ministry of Trade mentioned that the import of gold commercially was prohibited in Pakistan as importers had to arrange US dollars personally to import the precious commodity.
Earlier, while talking to the media, Advisor to the PM on Parliamentary Affairs Babar Awan said that National Assembly would meet on Monday (January 10) for the approval of the Finance (Supplementary) Bill 2021.
