Thursday Jan 06, 2022
ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday sought the right from the Senate Standing Committee on Finance to impose sales tax on the retail prices of all the commodities.
Continuing discussion on the Finance (Supplementary) Bill 2021 for the second day, the committee — led by its chairman Talha Mehmood — was briefed about the proposals in the bill.
It is pertinent to mention here that earlier, this right was held by the federal government and only used when permission was granted.
PPP leader Farooq H Naek, while opposing the proposal, asked why does the FBR need discretionary power?
Citing the 2016 Mustafa Impex case, Naek said this request by the revenue board is a "violation of a court's ruling."
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 the FBR’s request can be approved if the federal government and the Parliament grant permission to a federal body.
During the session, FBR Chairman Dr Muhammad Ashfaq Ahmed informed the committee that according to the new amendment's point of sale (POS) — a place where a customer executes the payment for goods or services and where sales taxes may become payable — would be applied to shops less than 1,000 square yards as several established businesses are running their operations from small shops.
Objecting to this proposal, Senator Faisal Sabzwari questioned the FBR chairman as to why was this proposal not mentioned before. The FBR official, however, clarified that this step is being taken to increase taxes, “we have to bring all the people under the tax net and the decision will be taken based on the data available.”
Meanwhile, endorsing Sabzwari’s views, Senator Saleem Mandviwala said that this move will create turmoil in the market.
He said this system has was introduced only six months ago, therefore, no amendment should be made based on this.
Taking into notice all the discussion, the chairman committee decided to postpone this proposal till next year's budget.
Speaking during the session, the FBR chairman said that the authorities are trying that this becomes the “last programme” of the International Monetary Fund (IMF).
He mentioned that after every two years, the Fund orders 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, lamenting that the state does not have sufficient resources hence, it cannot stand on its own feet.
He urged the Parliamentarians to provide suggestions to increase the revenue of the state.
Replying to his FBR’s defence, Naek said that the Parliamentarians try to strike a balance between the state and the people.
“The government is not raising direct tax collections,” he said, adding instead it is 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 are 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% 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.
Meanwhile, chairman Mehmood stated that 80 tons of gold were being smuggled and imported illegally. The officials from the Ministry of Trade mentioned that the import of gold commercially is not allowed in Pakistan as importers have to arrange US dollars personally in order to import the precious commodity.
The committee directed all relevant authorities to take immediate measures to control gold smuggling.
A day earlier, the Senate Standing Committee on Finance had termed the "mini-budget" an attempt to bring a tsunami of inflation in the country, The News had reported.
The committee unanimously believed that the finance bill will bring a negative impact on the common man, the publication reported.
"The revenue of the government is being increased at the cost of oppressing the common man," Naek had said.
At the onset of the meeting, the committee had objected to the unconstitutional order of the Senate to finalise the consideration of the finance bill within two days, whereas 14 working days were required to deliberate on the bill as per the constitution.
The committee also decided to give due deliberation on the matter and forward the same request to the Senate chairman to spare enough time to deliberate upon the matter.