A meeting of the Senate Standing Committee of Finance began discussion on the Finance Supplementary (Amendment) Bill, 2018 to suggest recommendations. The opposition members were not ready to accept the justification that the reversal of reforms was designed to facilitate the overseas Pakistanis and they hinted at some influence on the government. There are some other means and ways to facilitate those who are not required to become filers instead of giving blanket coverage to tax evaders, said the senators from opposition parties.
Chairman Federal Board of Revenue (FBR) Mohammad Jehanzeb Khan informed the committee, "If we implement any reform on informal economy abruptly, it will cause serious damage to the entire economy. Therefore, we are trying to resolve the matter in a way that the genuine tax evaders cannot escape and those who are not required to file returns are protected including pensioners, widows, overseas Pakistanis and those who have inherited properties."
The measures taken in the last budget not only had negative impacts but there were also issues in implementation because both property registration and vehicles registration are provincial subjects.
The committee members expressed concern on proposing removal of bar on non-filers for buying property and vehicles. The committee was told that the purpose behind removing the bar is the legal hiccup in the implementation of this decision as it does not specify measures for issues of inheritance, criteria for pensioners and overseas Pakistanis. It was told that the government is in process of developing a mechanism to address the issue and take measures to broaden the tax net.
Committee Chairman Senator Farooq Hamid Naek asked the Law Division, FBR and the members to come up with proposed draft on purchase and registration of property by non-filers.
The committee members across the political divide proposed to the FBR if there were some implementation issues, the tax authorities should make amendments in the previous laws instead of reversing the major tax reforms.
Musadik Malik said if the government wants to add operational measures, the senators of opposition will help them. Senator Haroon Akhtar stated, "We will not accept it in the existing shape because these were among the major reforms, as if one can buy Rs 5 million property, one should also pay tax."
Senator Mian Atiq Ur Rehman wanted the government to review the reversal of major reforms because when the reforms were introduced, a message was sent to everyone that one will have to pay tax. Eventually, the advance amount taken for the booking of vehicles was considerably reduced during the last three months.
State Minister for Revenue Hamman Azhar said the government is doing homework how to improve the measures to facilitate the overseas Pakistanis.
The chairman FBR stated that the informal economy exists in large-scale and it has to be curbed to broaden the tax base.
FBR Member Inland Revenue Dr Muhammad Iqbal said that the registration of property is a provincial subject. He said, "The reform was introduced in haste and now we are making another step in haste."
The members of the committee strongly opposed the measure and suggested to withdraw the reversal of the measure for disallowing purchase of property above Rs 5 million and vehicles for non-filers in the existing form.
The Senate Standing Committee on Finance, Revenue, and Economic Affairs in its meeting discussed the amendments in Customs Act 1969, Sales Tax Act 1990, Income Tax Ordinance 2001, as part of the Finance Supplementary (Amendment) Bill, 2018.
The meeting was chaired by Senator Farooq Hamid Naek here at the Parliament House and was attended among others by Senators Mohsin Aziz, Khanzada Khan, Anwar-ul-Haq Kakar, Haroon AKhtar Khan, Musadiq Malik, Mushahidullah Khan, Muhammad Ateeq Sheikh and Talha Mehmood.
The committee was given a briefing by Federal Board of Revenue regarding the amendments proposed in the Finance Bill. The committee was told that the intention behind readjustment of customs and general sales tax duties on raw materials is to benefit and flourish the local industry.
The committee also discussed revised tax rates and decided to defer discussion till more information is received. Amendments in the Federal Excise Tax 2005 and compliance with earlier directives will be discussed in the meeting to be held on Tuesday (today).
The chairman FBR said that the budget is based on assumptions and this year revenue collection was based on amnesty scheme and other measures. The whole amount was estimated at Rs 155 billion. The Finance Supplementary (Amendment) Bill, 2018 has been introduced to bridge the gap of Rs 155 billion in revenue projection with an effort to have no burden of additional measures on the low-income group.
For export sector, relief provided to the export industry on 194 customs tariff lines was examined and 129 of them have been approved while the customs duty on 34 tariff customs was reduced with revenue impact of Rs 4.4 billion. However, he added, "We expect that the relief provided in tariff lines will increase 10-20 percent through exports."
The committee deferred the approval of 34 customs tariff lines till today (Tuesday) and approval is contingent to a briefing by Ministry of Commerce on the impact of each tariff line on exports.
The committee approved the proposal of sales tax exemption on imports of stunts for public and commercial hospitals and was informed by the FBR that the customs duty on these items is already at zero percent.
The committee has also approved addition of LNG along with RLNG for tax rates on input to remove the anomaly for gas supplying companies. The reduced rate now being made available is only on supplies of RLNG / LNG to gas transmission and distribution companies.
The committee also approved increase in additional charges from Rs 40 to Rs 65 on potassium chlorate used in match boxes in an effort to penalize the non-registered manufacturers.
The committee approved the proposal that the FBR will not conduct audit of taxpayers who would revise their tax liability at 25% higher than their declared tax liability. The FBR has justified that the late filers have been provided the facility to pay 25 percent higher tax as compared to previous year to ensure closure of audit.
FBR Member Tax Policy Dr Iqbal said that the increase in tax for salaried and non-salaried individuals would offset one-third of the revenue loss that was caused by the substantial relief provided by the previous government.
Senator Haroon Akhtar suggested that the quantum of increase in tax for salaried and non-salaried higher slabs should be rationalized.