The PAC after hearing the viewpoints of various ministries dealing with different sectors of economy directed Federal Board of Revenue, Finance Division, Commerce and Industries Ministries, Board of Investment and National Tariff Commission (NTC) to devise a consensual strategy and bring it to the committee within two weeks to do away with SROs. The PAC directed Deputy Chairman Planning Commission to head the process for formulation of guidelines to be submitted to the PAC within two weeks.
The Deputy Chairman Planning Commission said frequent shifts in policy were not sending a positive signal to foreign investors who are not willing to invest in the country due to uncertainty in policy. Naghmi said according to foreign investors, major concern was lack of consistency in policy for making investment in Pakistan and not the law and order situation in the country. Policy shift was being done through SROs which also marred all the efforts aimed at reforming the tax system, Deputy Chairman Planning Commission said. He said that the country launched various International Monetary Fund (IMF) programmes to bring about tax reforms but exemption and protection granted to individual and industries through SRO failed all the efforts.
Chairman of FBR, Ali Arshad Hakeem said that a plan was under preparation to get rid of SROs and would be submitted to the PAC in January 2013. He told the PAC that FBR was conducting a study which would be completed by next month and subsequently all the SROs, with their total quantum of impact on the exchequer, would be brought before the Parliament. We wanted to make the SROs part of the Act, he said, adding that only a fair and growth-oriented system would lead to higher tax collection in the country.
Additional Secretary Commerce said parliamentary oversight is needed on issuance of SROs to curb their misuse. This, he said could be done by consulting the concerned standing committees before seeking approval of SRO from the ECC.
The Auditor General Pakistan stated that through an Act 1969, the Parliament empowered FBR to issue SROs, but the power could be withdrawn if it thinks these were being misused. He also pointed out that 45 audit paras worth Rs 5.5 billion regarding misuse of SRO were detected by the Auditor General of Pakistan (AGP).
PAC member Sardar Ayaz Sadiq and Zahid Hamid of Pakistan Muslim League (N) strongly criticised taking major policy decisions in terms of taxes and duties through SROs and stated that taxation was the prerogative of the Parliament. Ayaz Sadiq said that Rs 650 billion exemptions and concessions were given to the individuals, companies and influential industries.
Yasmin Rehman, Atiya Inayatullah and others also spoke against the SRO culture, saying that levying taxes and allowing tax exemptions was prerogative of the parliament and it must withdraw its role instead of allowing FBR, ECC or Cabinet. The chairman of the PAC also directed FBR to clarify the position of parliamentarians who have been paying taxes but were accused of tax evasion by an NGO. He stated that the data was leaked from Federal Tax Ombudsman Office to the NGO. Arshad Ali Hakeem said the FBR has investigated into the matter and initial findings suggest that the FBR data was not stolen or used in the report.