Senate asks govt to withdraw GST hike

The Senate on Wednesday recommended that the government withdraw one per cent increase in the General Sales Tax (GST) and drastically curtail foreign junkets, including reducing the size of delegations going abroad.

These pieces of advice are part of the 74 budgetary recommendations the upper house approved which the standing committee on finance had put together. The panel had received 235 proposals from Senators and it unanimously agreed on 74, which were presented in the house on Wednesday.

The Senate’s recommendations will be sent to the National Assembly for consideration. The Senate recommendations are non-binding in nature and it’s entirely the National Assembly’s discretion whether or not to include them in the Finance Bill.

Another key recommendation is that the government freeze non-salary budget expenditures of federal ministries and divisions at the level of fiscal year 2009- 10.

The Senate wants all official foreign visits to be “drastically curtailed” and that the number of persons in each delegation should not be more than 10.

It has also recommended that the salary of government employees in BS 1 to 16 should be raised by 60 per cent instead of 50 per cent and the minimum wage should be increased to Rs9,000 from the current Rs7,000; also, the minimum pension should be increased from Rs3,000 to Rs4,000.

The Senate also called for increasing the family pension of widows of judges of the superior judiciary from 50 per cent to 75 per cent of the net pension.

The upper chamber of parliament also suggested that Rs5 billion from the Prime Minister’s Public Works Programme should be allocated for the flood-stricken areas of Balochistan. Another recommendation is that the 35 million acre feet water going  into the sea every year should be used for agriculture and to meet the energy requirements of the country through additional storage.

The Senate also wants the ministry of finance to present broad parameters of the budget in March and the detailed budget by mid-May every year in both houses of the parliament.

The Senate recommended that Income Tax/Corporate Tax on profit of banking sector should be increased to 40 per cent. The State Bank of Pakistan should work out a protocol in consultation with banks to make it obligatory for both local and foreign banks to spend at least 5 per cent of their profit on promotion of educational and health services in the country.

The Senate also recommended that the budgetary allocation for education at federal and provincial level should be increased to 3 per cent of GDP in the fiscal year and gradually increased to 5 per cent of GDP by the fiscal year 2014-15.

Change in the Income Tax structure has also been recommended. It wants PIA, Wapda, Pepco, Pakistan Steel Mills and Pakistan Railways restructured and operated under the public-private partnership.

Also, during the debate on the budget Raza Rabbani made a fiery speech. He said he feared a bloody revolution coming that will eliminate the current elite of the country. He said such a revolution could only be averted if the elite change their attitude and take steps to alleviate poverty.

He also said that the government could not have presented a better budget in the given circumstances when the economy is in dire straits.

The Senate will resume budget debate on Thursday morning.

Published in the Express Tribune, June 17th, 2010.