On Wednesday, the National Assembly Standing Committee on Finance and Revenue devoted its first day to listening to the grievances of the business community against the GST bill.
The daylong proceedings ended on a harsh note when PML-Q member Kashmala Tariq disturbed the proceedings and verbally attacked Minister of State for Finance Hina Rabbani Khar and the committee’s chairperson Fauzia Wahab of the PPP. This compelled the chair to adjourn the session till today (Thursday).
The business community, except the Pakistan Business Council, opposed the GST bill in its present form as the “Federal Board of Revenue (FBR) does not have the capacity to collect taxes and timely give refunds,” he added.
The most frequently used words in the presentations of all associations were “refunds” and “corruption in FBR”. Businessmen fear that the new tax regime will generate billions of rupees of refunds that will open new “doors for corruption”. The FBR chairman admitted there was corruption, but insisted refunds would not be blocked this time around.
The PML- N hid behind the slogan of introducing a complete package of reforms. The MQM’s only representative, Rashid Godil, raised the slogan of agriculture tax and the member from Federally Administrated Tribal Areas, (Fata) Mahmood Orakzai also opposed the bill in its present form.
Despite that, it seems the government will be able to get the bill passed from the standing committee, as was revealed in background interviews with panel members.
In the 17-member committee, the PPP has five members, all of whom are from the president’s circle. Two votes of the ANP and JUI-F are likely to be in favour of the bill, said PPP officials.
The PML-N also has five members. Its four members will vote against the bill, but the fifth one is conditional to Jamil Malik’s timely arrival from abroad.
The MQM’s vote will either go against the bill or it may prefer to abstain. The Fata member opposed the bill in Wednesday’s meeting on the ground that the NA cannot legislate on a Fata subject. The PPP members said Orakzai’s concerns will be addressed before the voting, as the reformed GST will be implemented in Fata through a presidential order.
The PML-Q has three members in the committee. Background interviews with two of them revealed that Riaz Fatyana is likely to cast his vote in favour of the bill, giving the PPP the needed 9th vote. Kashmala Tariq may abstain from voting, while Faisal Saleh Hayat may be the only member of the party voting against the bill.
While responding to the PML-N, MQM and business community’s observations that the government was not netting the agriculture sector, Finance Secretary Salman Siddique said that in the 7th National Finance Commission Award, it was decided that the provinces will tax income from agriculture, which is documented and signed in Gwadar. “By no stretch of imagination, can the federation intrude in provincial subjects,” said Siddique.
Siddique said that after incorporating any change made in the standing committee on the GST bill, the provincial and federal tax laws will be finalised on December 7 and 8.
The Pakistan Business Council, a group representing top 30 businesses of the country, supported the implementation of GST bill. “The main reason of the opposition is documentation of gray market,” said Kamran Yusuf Mirza, the PBC’s Chief Executive Officer.
The Federation of Pakistan Chambers of Commerce and Industry President Sultan Chawla said the GST will not directly affect their businesses as they will collect the tax from consumers.
Pakistan Cotton Ginners Association representative Haroon Rashid said the FBR’s refund system is faulty, which will result in a blockage of refunds. “We used to pay 15 per cent of the refund amount as bribe to the FBR officials to get our refunds,” said Haroon and the FBR Chairman Sohail Ahmad did not contest his statement.
Rashid Haroon said that in the year 1996-97, the government taxed the ginning mills, collected Rs50 billion but returned Rs70 billion in refunds.
Published in The Express Tribune, December 2nd, 2010.
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