Tax collection: Govt defends decision to raise GST before end of fiscal year

Finance minister claims the move is legal and was a norm for previous govts.

ISLAMABAD:

Federal Minister for Finance Senator Ishaq Dar said on Saturday that the 1931 Act allowed the government to collect any increase in taxes, the General Sales Tax (GST) or customs duties immediately after the finance bill was presented to the National Assembly.

Speaking in the National Assembly, the finance minister said that tax collection has been enhanced immediately subsequent to the presentation of the bill before the house since 1947.



However, the minister told the opposition benches that the government was ready to amend the law if the opposition wanted to repeal it and change the practice. He reiterated that the collection of the proposed raise in the GST was a standard practice and was part of the law.

“This is also an international norm. This happens in Asia, and even India also does the same. Let us not play in the galleries for cheap political gains,” he added.



Law Minister Zahid Hamid read out the 1931 Act, stating that the law allowed the collection of levies and taxes on a provisional basis. He pointed out that the finance bill was accompanied by an attached document declaring that tax collection would start by June 13, and chastised opposition members for not reading the finance bill before criticising it.

Opposition parties, however, termed the move illegal and demanded an explanation from the government.

Earlier Pakistan Tehreek-e-Insaf’s deputy parliamentary leader, Shah Mahmood Qureshi, had said: “The finance minister should clarify why the raised tax collection has started from June 13 without the passage of the bill, while the finance bill states they would be collected by July 1. The house is yet to even debate the budget proposals. This tax collection is illegal and a violation of the constitution.”

Qureshi said that collection of increased taxes without the enactment of the finance bill into law was tantamount to usurping the authority of the parliament, and said that even the Supreme Court had taken notice of the matter. He said that the collection of tax on a ‘proposed’ finance bill was a violation of the law, which needed to be dealt with under the Constitution. He said that officers of the Federal Board of Revenue (FBR) had rendered the parliament meaningless, and it had now been proved that the FBR was a supra-parliamentary body.

In response, Dar pointed out that this practice was also carried out when Qureshi was part of the government as a minister, but Qureshi had never objected to it.

Sahibzada Tariqullah also spoke on a point of order and supported the objection raised by Qureshi. He said that collecting the increased GST without approval from parliament was illegal.

Shaikh Rashid Ahmed, on the other hand, observed that the government had had to retreat over its budget within only two weeks of being in power for the first time in history. He said that the government should review the raise in salaries for public sector employees, and stated that the raise should have been of at least 20% to 25%, in line with price hikes and inflation. 

Published in The Express Tribune, June 16^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.