Mini-Budget of Rs.170 billion Has Been Approved

The Senate committee approved the budget by a narrow margin of 3-2 and provided recommendations

ISLAMABAD: On Thursday, the Senate panel gave a narrow 3-2 majority endorsement of the Rs170 billion mini-budget .But advised the government to halve the proposed federal excise duty rates on juices in response to industry concerns. 

“In addition, the Senate Standing Committee on Finance objected to granting the Federal Board of Revenue (FBR). The power to increase the tax burden through notifications without obtaining parliamentary approval first.

The meeting was presided over and acknowledged by senator Saleem Mandviwalla from the Pakistan Peoples Party (PPP). T 

hat the addition to the financial bill will just put more of a strain on taxpayers. 

He suggested that action be taken by the government to put non-taxpayers under the control of the Federal Board of Revenue (FBR).

Besides the chairman, only three members of the committee were present at the meeting. The bill passed with a 3-2 majority, but Senator Mohsin Aziz from PTI opposed the mini-budget with some modifications.

Finance Minister Ishaq Dar presented the Finance Bill in the National Assembly (NA) a day earlier to secure the NA’s approval for the budget. which is being introduced as part of the agreement with the International Monetary Fund (IMF).

Senator Aziz raised concerns about the government’s assertion that the fiscal impact of these measures would only be Rs170 billion, contending that the actual yearly impact was in excess of Rs510 billion.”

Sales Tax

On February 15, 2023, the house was presented with the Finance (Supplementary) Bill 2023, which proposes an increase in the general sales tax (GST) from 17% to 18%, and an increase in the federal excise duty on sugary items, tobacco, airline tickets, marriage halls, and cement.

Although the government has already implemented the hike in GST via an administrative approval from the federal cabinet, it has now suggested granting the Federal Board of Revenue (FBR) comparable powers.

Senator Saadia Abbasi from the Pakistan Muslim League-Nawaz (PML-N) opposed the proposition that would allow the Federal Board of Revenue (FBR) to raise sales tax rates covered by the third schedule of the Sales Tax Act.

The Federal Board of Revenue (FBR) Chairman, Asim Ahmad, mentioned that the FBR lacked the authority to increase the sales tax rate on these products previously, which is why the government proposed the amendment to empower the FBR to increase taxes on products with a retail price.

Economy Crisis

Delegating these powers, however, would be equivalent to disempowering legislators and entrusting the fate of the nation to bureaucrats who, even during an economic crisis, are determined to acquire luxury vehicles.

“According to Senator Mandviwalla, the Aviation Ministry has raised concerns about the proposed 20% tax on business and first-class airline tickets or a minimum of Rs50,000.

Senator Aziz proposed that a more effective approach to tackling the issue of luxury items being imported would be to implement a ban, rather than just increasing taxes. He argued that an increase in taxes could lead to a rise in smuggling of these items.

In response, Dr Aisha Ghaus Pasha, the Minister of State for Finance, clarified that the government did indeed want to ban the import of luxury items, but this was not possible due to the limitations imposed by the World Trade Organization (WTO).

“As far as the smuggling of these luxury items is concerned, the FBR, in collaboration with Frontier Corps and other agencies, is trying to curb smuggling along the western border,” said Pasha.

The Federal Board of Revenue (FBR) does not have jurisdiction over international borders.

However, Murree Brewery and Shezan Enterprises representatives objected to the sudden increase of Federal Excise duty (FED) on sugary fruit juices and squashes at a rate of 10%, calling it unjustified.

FBR Response

In response, the FBR chairman argued that sugary drinks are unhealthy and that the government had increased the FED on carbonated water from 13% to 20% in line with the World Health Organization’s recommendations. The committee recommended a reduction in the FED on fruit juices from 10% to 5%.

Regarding the proposed tax on events and gatherings, the FBR chairman explained that individuals had to pay a 10% tax in advance to use banquet halls.

The tax evasion loophole created by the majority of unregistered banquet halls in the country was pointed out by Senator Mandviwalla.

who urged the tax machinery to make an effort to register these halls.

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