ISLAMABAD: A Senate panel restrained the government from extending a special incentive package to former custodians of the Senate and the National Assembly. It also recommended to the government to impose withholding tax on the trade of bearer certificates, which will help in registering the undocumented economy.
Senate Standing Committee on Finance and Revenue on Wednesday proposed that 0.3 per cent withholding tax, in addition to cash withdrawal, demand draft, online transfer and telegraphic transfer, should also be levied on the trade of bearer certificates.
It proposed that in addition to commercial banks, investment banks and money exchanges should also be brought under the scope of this levy. Government officials agreed to the proposals and committed to incorporate them into the Finance Bill 2010.
The Senate committee, headed by Senator Ahmad Ali, has started examining the Money Bill for formulating its recommendations, which will be made part of the budget.
Bearer certificates are transferable signed documents which promises to pay the bearer a sum of money at a future date or on demand. The instruments do not indicate the owner, helping to hide the source of income.
The government in the Finance Bill has proposed that in addition to cash transfers, 0.3 per cent withholding tax will be charged on demand draft, online transfer, telegraphic transfer, etc. The tax will be adjustable for registered persons. This is expected to generate Rs10 billion.
Federal Board of Revenue Chairman Sohail Ahmed said the levy would not be applicable to inter-bank transactions and was only aimed at netting unregistered persons.
The committee also recommended withdrawal of a proposal, contained in the Finance Bill, to give a special incentive package to former chairmen of the Senate and speakers of the National Assembly.
According to the proposal, other than perks and privileges they will be entitled to a discretionary grant of Rs1 million. Special Secretary Finance Asif Bajwa disclosed that the Senate Secretariat had floated the proposal. “Pakistan is not in a state to give such VVIP treatment,” said Senator Ishaq Dar.
The Senate panel also recommended withdrawal of a reduction of Rs1,000 in customs duty on the import of crude palm oil. “The decision was five-people specific,” claimed Senator Ilyas Bilour, who is also the owner of a ghee mill.
The FBR chairman said the incentive was in the public interest and would cost the kitty Rs500 million. However, he agreed to take back the proposal, as according to Bilour, it was against the business interest of other vegetable ghee mills.
The committee also recommended a freeze on non-development expenditures of the President Secretariat, PM Secretariat, National Assembly and Senate Secretariat.
The committee also called for taxing the income of foreigners, which they earn by extending loans to Pakistani businessmen. The FBR had proposed to exempt their income from tax. The clause was added to give benefit to a particular group, said Dar.
Published in the Express Tribune, June 10th, 2010.
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