Senate panel rejects most clauses in Finance Bill
Recommends fixing of exchange rate at Rs151 to a dollar, interest rate at 9%
The finance adviser stated that initiatives had been taken in the budget to curb the external and fiscal deficits by reducing expenditures and enhancing revenues. PHOTO: FILE
ISLAMABAD:
In a moral defeat for the government, a Senate panel on Thursday rejected all clauses of the Finance Bill 2019 that affect the common man and also recommended that the exchange rate should be fixed at Rs151 to a dollar and the interest rate be brought down to single digit.
The Senate Standing Committee on Finance rejected most of the clauses of the Finance Bill 2019 with a majority vote amid boycott by treasury members. The Senate, which has a tradition of adopting the report of the standing committee, is also expected to reject the Finance Bill.
It would be a rare case if the Senate committee and the upper house of parliament rejected the entire Finance Bill. But the Senate’s recommendations are not binding on the National Assembly in case of the Finance Bill.
However, the treasury members proposed that the government should fix the exchange rate at Rs151 to a dollar by floating dollars in the market and slash the interest rate from 12.25% to 9%. Both these proposals are against the agreement signed with the International Monetary Fund (IMF).
The development came amid Prime Minister Imran Khan’s refusal to provide concessions to industrialists on the issue of 17% sales tax at the manufacturing stage and the requirement to get Computerised National Identity Card (CNIC) number of unregistered buyers by the manufacturers.
Opposition brands finance bill ‘IMF budget’
PM Imran rejected both the demands during a meeting with the industrialists held on Thursday.
Finance Bill
“The increase in taxes whereby these taxes burden the common man and increase the prices of goods used by the common man is rejected in totality,” said Standing Committee Chairman Senator Farooq H Naek while reading out the committee’s decision.
JUI-F, PML-N and PPP members supported the rejection of the Finance Bill and two members of the PTI walked out against the committee’s decision.
“The country has always had deficit budgets and people should not be burdened due to mistakes committed by the PTI government in the past one year,” remarked Senator Ayesha Raza.
She said the Federal Board of Revenue (FBR) should have planned to collect Rs5.55 trillion in taxes next year by capturing the true potential but instead it increased the burden on existing taxpayers.
The government has hiked tax rates on the salaried class, corporate sector, interest income, dividends, business income, imposed sales tax on every thinkable commodity, enhanced additional customs duty rates and imposed federal excise duty on cars, cement, steel, cooking oil, etc.
This is expected to stoke inflation in the next fiscal year, estimated at 13%, and would slow down economic growth to 2.4%, which is a perfect stagflation situation that causes unemployment and poverty in the country.
The standing committee also recommended the government to stop publishing the Taxpayers’ Directory and instead publish names of those who did not pay any tax. It recommended that banks must maintain secrecy and should not share details of accountholders with the FBR.
The standing committee backed the government’s proposal to increase the tax burden on banks and the rich.
Rs40,000 prize bond to be discontinued
On the proposal of PTI Senator Mohsin Aziz and Senator Dilawar Khan, the committee recommended that the interest rate should be cut to 9%. It also recommended that the exchange rate should be fixed at Rs151 to a dollar through intervention by the State Bank of Pakistan.
Industrialists’ demands
Meanwhile, a delegation of the industrialists met with PM Imran and Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh where they urged the PM to withdraw the 17% sales tax imposed at the manufacturing stage on textile, carpets, leather, sports and surgical goods.
Their second major demand was that the government should withdraw the condition of seeking CNIC from unregistered buyers.
“The premier has rejected both of these demands,” confirmed a government official to The Express Tribune.
A finance ministry statement also said “the condition of CNIC, for invoice, will remain in place with the objective of documenting the economy”.
But it was agreed that no action would be taken against taxpayers on the basis of any wrong information with respect to the CNIC.
The finance adviser stated that initiatives had been taken in the budget to curb the external deficit and fiscal deficit by reducing expenditures and enhancing revenues of the country. He urged the business community to support the government in its endeavours to boost the economy.
The finance ministry stated that the meeting approved the demand of business community to develop criteria in which a person was not repeatedly selected for audit without any definite information about tax evasion. In order to facilitate the business community, the FBR chairman assured them that a new system of refund would be introduced to issue refunds to the exporters at the time of export.
Regarding commercial imports, the meeting approved the proposal of the business community to do away with the presumptive tax on commercial imports.
Published in The Express Tribune, June 21st, 2019.
In a moral defeat for the government, a Senate panel on Thursday rejected all clauses of the Finance Bill 2019 that affect the common man and also recommended that the exchange rate should be fixed at Rs151 to a dollar and the interest rate be brought down to single digit.
The Senate Standing Committee on Finance rejected most of the clauses of the Finance Bill 2019 with a majority vote amid boycott by treasury members. The Senate, which has a tradition of adopting the report of the standing committee, is also expected to reject the Finance Bill.
It would be a rare case if the Senate committee and the upper house of parliament rejected the entire Finance Bill. But the Senate’s recommendations are not binding on the National Assembly in case of the Finance Bill.
However, the treasury members proposed that the government should fix the exchange rate at Rs151 to a dollar by floating dollars in the market and slash the interest rate from 12.25% to 9%. Both these proposals are against the agreement signed with the International Monetary Fund (IMF).
The development came amid Prime Minister Imran Khan’s refusal to provide concessions to industrialists on the issue of 17% sales tax at the manufacturing stage and the requirement to get Computerised National Identity Card (CNIC) number of unregistered buyers by the manufacturers.
Opposition brands finance bill ‘IMF budget’
PM Imran rejected both the demands during a meeting with the industrialists held on Thursday.
Finance Bill
“The increase in taxes whereby these taxes burden the common man and increase the prices of goods used by the common man is rejected in totality,” said Standing Committee Chairman Senator Farooq H Naek while reading out the committee’s decision.
JUI-F, PML-N and PPP members supported the rejection of the Finance Bill and two members of the PTI walked out against the committee’s decision.
“The country has always had deficit budgets and people should not be burdened due to mistakes committed by the PTI government in the past one year,” remarked Senator Ayesha Raza.
She said the Federal Board of Revenue (FBR) should have planned to collect Rs5.55 trillion in taxes next year by capturing the true potential but instead it increased the burden on existing taxpayers.
The government has hiked tax rates on the salaried class, corporate sector, interest income, dividends, business income, imposed sales tax on every thinkable commodity, enhanced additional customs duty rates and imposed federal excise duty on cars, cement, steel, cooking oil, etc.
This is expected to stoke inflation in the next fiscal year, estimated at 13%, and would slow down economic growth to 2.4%, which is a perfect stagflation situation that causes unemployment and poverty in the country.
The standing committee also recommended the government to stop publishing the Taxpayers’ Directory and instead publish names of those who did not pay any tax. It recommended that banks must maintain secrecy and should not share details of accountholders with the FBR.
The standing committee backed the government’s proposal to increase the tax burden on banks and the rich.
Rs40,000 prize bond to be discontinued
On the proposal of PTI Senator Mohsin Aziz and Senator Dilawar Khan, the committee recommended that the interest rate should be cut to 9%. It also recommended that the exchange rate should be fixed at Rs151 to a dollar through intervention by the State Bank of Pakistan.
Industrialists’ demands
Meanwhile, a delegation of the industrialists met with PM Imran and Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh where they urged the PM to withdraw the 17% sales tax imposed at the manufacturing stage on textile, carpets, leather, sports and surgical goods.
Their second major demand was that the government should withdraw the condition of seeking CNIC from unregistered buyers.
“The premier has rejected both of these demands,” confirmed a government official to The Express Tribune.
A finance ministry statement also said “the condition of CNIC, for invoice, will remain in place with the objective of documenting the economy”.
But it was agreed that no action would be taken against taxpayers on the basis of any wrong information with respect to the CNIC.
The finance adviser stated that initiatives had been taken in the budget to curb the external deficit and fiscal deficit by reducing expenditures and enhancing revenues of the country. He urged the business community to support the government in its endeavours to boost the economy.
The finance ministry stated that the meeting approved the demand of business community to develop criteria in which a person was not repeatedly selected for audit without any definite information about tax evasion. In order to facilitate the business community, the FBR chairman assured them that a new system of refund would be introduced to issue refunds to the exporters at the time of export.
Regarding commercial imports, the meeting approved the proposal of the business community to do away with the presumptive tax on commercial imports.
Published in The Express Tribune, June 21st, 2019.