A welcome ruling by the SC

Judicial interference in administrative affairs is something we ordinarily view with suspicion. In the case of nullifying the government’s decision to overturn the one per cent increase in the general sales tax (GST) rate, we feel that the arguments made by the Supreme Court hold merit. The manner in which the increase was announced was troubling. The statutory rate of sales tax — as it exists in the General Sales Tax Act of 2010 — is 17 per cent for most items that are subject to taxation. However, through an administrative measure known as a statutory regulatory order (SRO), the previous administration had reduced it to 16 per cent in a populist bid to win votes. The current administration argues that, since the decrease was an administrative measure, the increase back to the original rate can also be done through an administrative measure.

The Court, however, disagrees, saying that at a time when parliament is debating the budget, the government is obliged to put this measure before the legislature for discussion. We applaud the Court’s recognition of the supremacy of parliament. However, there is another issue, which we hope the Court will also look into. SROs are an exceedingly corrosive and corruption-inducing feature of our tax system, and one that bypasses legislative authority by placing the power to set tax rates in the hands of senior officials at the Federal Board of Revenue (FBR). Taxation rates should only be set by parliament. Perhaps, in its ruling on the GST, the Court could also have declared SROs unconstitutional.

In our view, the very notion of democracy depends on the government collecting and distributing services and making decisions about those two acts through the consent of the governed. Only elected representatives should have the power to set tax rates in a transparent manner. In unkinder times, the British executed their king and abolished the monarchy itself for levying taxes on the people without parliament’s consent. Those at the FBR should consider themselves lucky that such a drastic measure is not on the cards.

Published in The Express Tribune, June 23^rd, 2013.

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