Senate begins the debate on GST bill

Senators debate RGST amidst reservations from government allies and the opposition.

ISLAMABAD: Senators began debating the reformed general sales tax (RGST) in its session on Tuesday, amidst reservations from government allies and the opposition.

The Senate will forward its recommendations to the National Assembly. However, earlier in the day, the government managed to have the proposed bill approved from the Senate’s standing committee on finance.

Senator Raza Rabbani, a key legal wizard of the PPP, raised an objection when Finance Minister Hafeez Sheikh, in his opening speech, underscored the need for the proposed reforms in the country’s obsolete revenue collection system.

Sheikh admitted that the new law was one of the conditions imposed by the International Monetary Fund but it was also in the interest of the country to reform the 20-year-old revenue collection system.

“Without RGST, the government will not be able to provide vital public services,” he said, adding that through the new taxation system, the government was trying to rationalise the revenue system by including those sectors in the tax net that were currently enjoying exemptions.

“Currently, the government is collecting 17 to 25 per cent tax on different items. After the new law, a flat rate of 15 per cent will be charged for all sectors,” the finance minister said. He said that the taxable income limit was also being increased from Rs5 million per year to Rs7.5 million.

As the finance minister concluded his speech, Rabbani, who headed the parliamentary committee that drafted the 18th Amendment, objected that after the constitutional changes, the federal government cannot legislate on the GST, unless provincial assemblies empower it by passing resolutions in their respective houses.

Muttahida Qaumi Movement’s (MQM) Babar Ghauri, whose party’s vote for and against the law will matter much in the National Assembly, alleged that the government had cheated his party in the standing committee, which was headed by MQM’s Senator Ahmed Ali.

He said that Ali was in London and wanted to return to chair the standing committee’s meeting but the government had delayed his arrival by telling him that the Pakistan International Airlines (PIA) flight he was meant to take had developed a fault and he would have to wait.

Opposition leader in the Senate Waseem Sajjad said that the proceedings of the standing committee on finance and revenue were illegal, although his party, along with some other parties, had extended its conditional support to the bill at the time of its approval in the committee.

Published in The Express Tribune, November 24^th, 2010.