Provinces are not ready to authorise federal government to impose tax on agriculture income, said Finance Minister Ishaq Dar on Monday. Speaking before the Senate Standing Committee on Finance with Senator Nasreen Jalil in the chair to discuss the proposals of members for recommendations in Finance Bill 2014, Ishaq Dar said it would be a violation of Constitution to collect tax on agriculture income through Finance Bill.

The Minister said that tax collection by the provinces on agriculture income remained very poor as only Rs 700 million have been collected in Punjab while Rs 300 million in Sindh. Dar said that such a low collection by a sector that has 21 percent share in the GDP is a matter of concern. The Minister said that any further increase in salaries and pensions is unlikely due to fiscal sonstraints and this situation would continue for the next three years.

The chairperson of the committee in her opening remarks said that the budget does not offer anything to the poor and the tax collection seems stagnant at 8 percent of the GDP as Federal Board of Revenue (FBR) has completely failed to broaden the tax net. Jalil further stated that load-shedding continues like in the past with no sign of improvement in the situation during the last one year. She said it was unclear as to how electricity and gas shortages would be managed in the next two years.

The Finance Minister reiterated that tax authorities would be able to twice downward revised revenue collection target of Rs 2275 billion for the current fiscal year, and electricity consumers that use 200 units monthly would be provided subsidy. The government would have to provide a Rs 285 billion subsidy to protect consumers using 200 units monthly. The Minister said that the federal government would begin a deduction of 25 per cent of provincial electricity bill through federal adjuster from July 1, 2014 and assured the committee that 10 to 11,000MW electricity would be added to the system over the next three years and both Dasu and Diamar Basha Dam would be constructed. Dar stated that Pakistan does not need to take an NOC from India for construction of Diamar Basha dam.

The Minister said that 50 per cent of the country's population on the basis of two dollar daily income is living below poverty line, which needs to be taken care of. He said the government has earmarked Rs 118 billion in the budget for Benazir Income Support Programme (BISP) to provide financial support to over 5 million families.

Copyright Business Recorder, 2014