Govt asked to restore budget documents

Senate panel rejects proposal that seeks taxpayers' profile before income tax registration


Shahbaz Rana June 20, 2020
PHOTO: FILE

ISLAMABAD: A Senate panel on Friday directed the government to restore the budget documents in their original form and rejected a proposal aimed at binding taxpayers to share all information with tax authorities.

The Senate Standing Committee on Finance, which was deliberating the Finance Bill 2020 in detail, turned down the government's proposal that would require a taxpayer to submit his profile before seeking income tax registration.

The government has proposed that every person applying for income tax registration will have to disclose all his bank accounts, utility connections, business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer, type of business and all other such information.

According to the budget proposal, the existing 2.5 million taxpayers will have to furnish the information by December 31, 2020 and within three months in case of newly registered persons.

"It is a scary proposal that the standing committee cannot endorse," said Committee Chairman Senator Farooq H Naek.

But Federal Board of Revenue (FBR) Member Policy Dr Hamid Ateeq Sarwar argued that without having complete profile of a taxpayer, it could not document the economy.

Pakistan's tax-to-gross domestic product (GDP) ratio had been less than 10% for the last many years and it could not be increased to 15% without approval of the taxpayer's profile clause, said Sarwar.

The Senate Standing Committee on Finance is probably the only parliamentary forum that has been discussing the budget in minute details aimed at improving the budgeting process, knowing the rationale of tax proposals and making recommendations where it deems fit.

However, its recommendations are not binding on the government in case of the Finance Bill and the National Assembly is only empowered to accept or veto a tax proposal - a constitutional issue that needs a review.

The standing committee directed the finance ministry to restore the budget-in-brief document in its original form, terming the new shorter revised version an attempt to "cheat the system and end transparency".

Pakistan Muslim League-Nawaz (PML-N) Senator Ayesha Raza Farooq raised the issue of making changes in the budget-in-brief document after its presentation in parliament. "It is really an attempt to cheat the system and end transparency," she remarked.

The Express Tribune reported on Thursday that the finance ministry revised the budget-in-brief document after its presentation in parliament and removed the revised budget estimates for the outgoing fiscal year from the document.

Additional Secretary Budget Tanveer Butt insisted that the government did not compromise on transparency and the purpose of presenting the revised and shorter version was to end duplication and fix errors. But the committee did not accept the explanation.

"Please do not hide behind silly excuses and upload the original document on the website," directed Senator Naek.

The committee engaged in a heated debate on the issue of whether to bring amendments under certain principles or each amendment should be seen in the context of ground realities and vested interests while deviating from the principles of promoting local industries and job creation.

PML-N Senator Musadiq Malik was of the view that the government did not follow any principle and proposed changes depending on the need and pressure.

The standing committee also rejected another budget proposal that sought real-time access to manufacturing facilities. It expressed reservations about the proposal to link NADRA's data with the FBR, terming it a breach of confidentiality.

"We have to keep ground realities in mind, particularly when there are incidences of using taxpayers' information for other than tax purposes," said Senator Malik.

The standing committee rejected a proposal of depositing 10% of the disputed tax demand by a taxpayer before filing appeal with the appellate tribunal.

"This budget proposal is tantamount to making justice expensive and is also against natural justice and the constitution that guarantees the right to free trial," said Senator Ayesha Raza Farooq.

The committee directed the Ministry of Finance to produce the agreement that it signed with the World Bank for reducing the number of withholding taxes from 48 to 23 in three years.

In the first year, the government has proposed the abolition of nine types of withholding taxes that were annually contributing less than Rs500 million to the national exchequer but were adding to the cost of doing business.

Sarwar said Pakistan had signed an international convention with the World Bank under the $400-million Pakistan Raises Revenue Project.

Any agreement that had not been ratified by parliament could not be binding until approved by parliament, said Naek.

The standing committee endorsed the proposal of getting information about all bank accounts, irrespective of the deposit level. At present, it is binding on banks to provide information about only those bank accounts where the deposit is more than Rs500,000.

Sarwar said it was cumbersome for banks to provide selected information and the new proposal had been made after consultation with the commercial banks.

Published in The Express Tribune, June 20th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

COMMENTS

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ

E-Publications

Most Read