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Lawmakers of Upper House adopt new tax measures of Rs170 bln

ISLAMABAD:- The Senate Standing Committee on Finance and Revenue passed proposed supplementary Finance Bill 2023 with simple majority on Thursday.

The Committee met under the chairmanship of Senator Saleem Mandviwala here on Thursday. Chairman Federal Board of Revenue (FBR) and his team has presented the proposed supplementary Finance Bill which was introduced in the Parliament by Finance Minister Ishaq Dar.

The Finance (Supplementary ) Bill 2023 laid in the House on 15th February, 2023 brings about an increase in the general sales tax from 17 to 18 pc besides increasing the Federal Exercise duty on sugary items, tobacco, airline tickets, marriage halls  and cement.

The committee has approved the supplementary Finance Bill with simple majority due to opposition of PTI Senator Mohsin Aziz. He said that the government has taken tax measures worth Rs510 billion in the name of Rs170 billion.
While briefing about the tax measures suggested in the Supplementary Finance Bill, Chairman FBR Asim Ahmed told the committee that the government has increased sales tax on the luxury imported items which was banned during the last year. While responding on a suggestion regarding imposition of ban on import of luxury items by Senator Mohsin Aziz, the committee was informed that the govt can’t impose ban on import due to the World Trade Organization.

Senator Saleem Mandviwalla apprised the Finance divison that the Aviation ministry has wrote a letter to Committee and expressed reservations on 20 pc tax on Business Class and First class tickets.

Aviation ministry commented that the proposed tax is not workable because the fare of tickets are not static and vary from time to time. Senator Saleem Mandviwalla suggested that instead of imposing 20pc tax, a definite amount should be fixed for each destination.

The Senate body was informed that the ministry of finance and revenue has increased the GST from 17 to 18 p.c. on products bearing retail price. Asim Ahmad, Chairman FBR, stated that FBR was not empowerd earlier to increase sales tax on these items and that’s why ministry put forward this bill which results in empowering the FBR to increase tax on items bearing retail price. Senator Saadia Abbasi rejected this provision of the Bill.

The committee was informed that the A 25 percent sales tax has been levied on mobile phones valued of above from $500. It was briefed that the FBR has issued SROs to levy taxes after Cabinet approval as In the Third Schedule, the Federal Cabinet is empowered to increase the sales tax adding that this power was not previously vested in the Federal Cabinet.

Senator Sadia Abbasi, who belongs to the treasury benches, opposed the proposed FBR amendment, and said, we should not give signals to the general public that we have supported him.

The PTI’s Senator Mohsin Aziz told the committee that he will not support the proposed Supplementary bill.
On a query, the Chairman FBR told the committee that the government has jacked up the sales tax from 17 percent to 25 percent on those imported luxury items which whose import was banned last year.

Senator Mohsin Aziz opposed the proposal to increase the sales tax on imported luxury items and suggested that these items should be banned instead of increasing the sale tax.

The State Minister on Finance Dr. Aysha Ghous Pasha told the committee that the country has set trend of subsidies to give relief to the public since decades but no one wants to pay taxes. The Govt has no other option but to impose taxes to deal the prevailing difficult economic conditions.

While remembering the talks with IMF, she said that it was advised to Pakistani authorities either you run the country or run the power sector because the losses of the sector has been reached at unbearable level.

It is pertinent to mention here that the circular debt of the energy sector has been crossed to Rs4200 billion which is equal to almost of defence budget of two and half years and public sectors development programs of almost six years.

Dr Pasha said that the govt will completely abolish the tax on daily essential items as IMF has objection on some certain taxes.

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