Improving the draft: Senate panel amends, clears finance bill

Land reform, wheat support price issue referred to Cabinet.

ISLAMABAD:

Amid opposition boycott, the Senate Standing Committee on Finance Friday cleared Finance Bill 2011 with some amendments in the proposed draft but referred contentious land reforms and wheat support price issues to the Cabinet for consideration.

The Senate Standing Committee on Finance and Revenue finalised the money bill which carries all taxation measures, and adopted over 100 recommendations tabled by the Senate besides unanimously agreeing to certain amendments.

For the fourth consecutive day of its proceedings, the committee had to deal with quorum issues due to a boycott by senators from Pakistan Muslim League-Nawaz (PML-N) and -Quaid (PML-Q) and Jamaat-e-Islami (JI) against the government’s decision of appointing Senator Ghafoor Haideri as opposition leader.

Legally vague

The committee criticised the Federal Board of Revenue (FBR) on poor language of the Finance Bill and highlighted several lacunas.

“The legal language of the bill is vague”, said Senator Sughra Imam of the Pakistan Peoples Party (PPP).

“Despite serious quorum issues, the committee worked above party lines and finalised the Finance Bill”, said chairman of the committee, Senator Ahmed Ali of Muttahida Qaumi Movement.

Senator Ali has the privilege of chairing one of the most important committees for eight years; he retires in Mach 2012.

Besides improving the Finance Bill, the committee made a recommendation of increasing the income tax exemption threshold to Rs350,000, he said. The committee would now table its report in the Senate which will then forward it to the National Assembly (NA). The NA has the authority to either reject or accept the recommendations.

Traditionally, the recommendations agreed by the finance ministry or the FBR at Senate committee level are accepted by the NA.

Sales tax recommendations

The committee also recommended to the government to immediately reduce the sales tax rate to 16% and abolish the special excise duty as against the budget proposal of making these changes effective from July 1. FBR endorsed the committee recommendation.

Due to the decision of lowering or abolishing rates from July, businessmen have halted the process of filing their turnover statements which would have a negative impact on revenue worth Rs100 billion for the month of June, said Senator Talha Mahmood of Jamiat Ulema-e-Islam-Fazl (JUI-F).

The FBR official said the government was already working on the proposal and there were expectations that the decision might be announced in a couple of days.

The committee introduced one major amendment in the Sales Tax Act and seven amendments in the Income Tax Act.

Other measures

On the issue of introducing land reforms and giving up of wheat support price mechanism, both the PPP and MQM refused to budge from their stated positions and agreed to resolve the issue out of the committee platform.

The committee also endorsed FBR’s proposal to levy road tax on vehicles involved in transit of Afghanistan-bound cargo. “The transit fee is proposed to improve software, install scanners and tracking system to discourage smuggling”, said member customs FBR Mumtaz Haider Rizvi.

Published in The Express Tribune, June 11^th, 2011.