Hike in subsidy for power sector proposed

Published Jun 07, 2012 12:26am

ISLAMABAD, June 6: The Senate Standing Committee on Finance on Wednesday recommended that subsidy for power sector be raised to Rs500 billion for 2012-13.

A meeting of the committee, presided over by Nasreen Jalil, discussed the budgetary proposals forwarded by Tahir Mashhadi. The committee was, however, divided over huge amount of subsidy for electricity.

Supporting the idea, Senator Ilyas Bilour said if the country can bear Rs1 trillion budget deficit, an additional load of Rs500 billion can also be absorbed.Senator Mashahidi said that the deficit of Rs500 billion can be covered with higher economic activity generated due to the availability of electricity.

Senator Kulsom Parveen and Senator Sardar Fateh Mohammad said that officials have failed to identify the economic loss faced by the country due to electricity shortages in the country.

The suggestion invited sharp reaction from officials of the finance ministry, who said that an additional Rs500 billion in terms of subsidy would mean increasing inflation from targeted 9 per cent in the next fiscal year to 13 per cent.

“How can we announce a budget with a 7.7 per cent deficit,” the additional secretary (finance) said.

Sughra Imam, the only senator who came to rescue of officials, said that economy cannot afford to have such huge subsidies.

“It is a serious issue to have Rs1.5 trillion deficit only to support the energy crisis,” Ms Imam said.

Amid dissenting note by Sughra Imam, the committee adopted the recommendation for Rs500 billion energy subsidy during 2012-13 by reducing non-development expenditures.

The officials of Federal Board of Revenue suggested a special tax on domestic consumers who are billed more than 1,000 units in a month.

However, senators turned it down on the ground that increasing electricity rates would be unfair as long as there was no uninterrupted electricity supply to consumers.

The committee recommended enhancement of duty slab on import of all vehicles above 1,800cc from 150 per cent to 160 per cent from July 1.

It was also recommended that an annual luxury vehicle duty of Rs100,000 be imposed for those possessing such vehicles.

“It would help additional tax generation and discourage import of such heavy vehicles,” Senator Haji Adeel said.

The Senate body also directed the FBR to finalise Capital Gains Tax rules on sale of immoveable property in consultation with the provinces for uniform valuation of immovable property in the country.

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