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The tax officials had to face the brunt as the ruling PML-N had lost its representation in the committee after Ishaq Dar became the finance minister. —File Photo
The tax officials had to face the brunt as the ruling PML-N had lost its representation in the committee after Ishaq Dar became the finance minister. —File Photo

ISLAMABAD: Senators belonging to the main opposition parties have confronted tax officials over controversial proposals presented in the budget and suggested a number of amendments to the Finance Bill 2013.

The Senate Standing Committee on Finance dominated by the opposition PPP, ANP and MQM members took the ill-prepared tax officials to task by bombarding them with queries over the past two days.

The tax babus had to face the brunt as the ruling PML-N had lost its representation in the committee after Ishaq Dar became the finance minister. Even the minister did not turn up to the committee’s meetings most of the time – perhaps to avoid facing criticism from his colleagues.

It appeared that the tax proposals had not been evaluated by the Federal Board of Revenue (FBR) as the tax officials were unable to explain them in an effective way to convince the senators, which provided enough room to the senators to propose recommendation against them.

The recommendations of the standing committee will be presented in Senate for approval which will be sent to the National Assembly for consideration. It is not binding on the National Assembly to accept recommendation from the Senate for the bill.

In total, senators have put forward 374 proposals for discussion. Less than 100 were discussed in the past two days by the committee making it difficult to complete the others in the next few days.

Most of the proposals from the senators are overlapping in nature and revolve around protecting the interests of certain lobbies/interest groups. It also appeared that senators are only paying lip service to the need for an agriculture income tax, and are not in a mood to support some initiatives of the FBR like bringing various players of the construction industry in the tax net.

Senator Muhammad Talha Mahmood of the Jamiat Ulema-e-Islam-Fazl (JUI-F), a businessman by profession, dominated the whole discussion on tax proposals followed by Haji Adeel of the Awami National Party (ANP). Most of their discussions were political in nature.

During the discussion, FBR succeeded in receiving support from unwilling senators about the imposition of capacity-based tax in the future. The provision will enable tax officials to levy tax as per the capacity of certain industries.

Senator Haji Adeel of ANP boycotted the meeting after his failure to muster support for his proposals. However, he was brought back to the meeting by senators Usman Saifullah Khan of Pakistan Peoples party (PPP) and Eng. Muhammad Hamayun Khan Mandokhel, an independent senator from Balochistan.

Adeel, known for losing his temper, has a one-point agenda to get facilities for the business community of Khyber-Pakhtunkhwa (KP) restored, which have been withdrawn in the budget. The FBR chairman, however, assured that the refund issue of KP businessmen will be resolved at the earliest.

Tax officials led by Finance Secretary Dr Vaqar Masood Khan agreed with the observation of Senator Usman Saifullah Khan that most of the withholding proposals are for registration purposes. He wondered why and how FBR failed to register businesses without the imposition of additional taxes, which will raise serious issues of refunds for genuine taxpayers.

The proposal of PPP Senator Sughra Husain Imam to convert the income support levy into tax was supported by Haji Adeel of the ANP, Nasrin Jalil of MQM, Kalsoom Perveen of BNP-Aand Usman Saifullah. Imam explained that it should be converted into tax so that the provinces also get their due share.

However, she ignored the fact that her PPP-led government also imposed the petroleum levy in the past couple of years which yielded more than Rs100 billion for the national kitty – but which was not shared with the provinces.

Mandokhel, independent senator Muhammad Talha supported the PML-N proposal of the income support levy to be exclusively used for the eradication of poverty in the country. This money will go for the Benazir Income Support Programme, Mandokhel elaborated.

Most of the senators also unanimously approved increasing the income tax exemption threshold from the current Rs400, 000 to Rs500, 000 for individual taxpayers.

Senators also criticised government move to exempt taxes on hybrid cars, which they said will only benefit the elite class in the country. However, tax officials believed it will promote investment in the hybrid sector in the country, but it was not clear who will be the ultimate beneficiary of this policy incentive.

FBR chairman conceded before the committee that the past amnesty schemes did not bring the desired results. He said it was also unfair with the honest taxpayers.

Some of the other proposals made for reversing the government decisions include reduction of GST rate to 16 from 17 per cent. It was pointed out that Finance Minister Dar had taken a stance last year to reduce GST to 15 per cent when he was in opposition but had now increased it to 17 per cent instead of honouring his own demand for reducing its rate.