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Senate panel rejects three key proposals of finance bill

Updated January 31, 2019

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Finance Minister Asad Umar along with the entire top brass of the finance and revenue divisions were absent from inaugural meeting of Senate Standing Committee on Finance. — File photo
Finance Minister Asad Umar along with the entire top brass of the finance and revenue divisions were absent from inaugural meeting of Senate Standing Committee on Finance. — File photo

ISLAMABAD: The Senate Standing Committee on Finance on Wednesday rejected three key proposals of the finance second amendment bill 2019 and cancelled the inaugural session of its meeting in protest against the absence of the entire top brass of the finance and revenue divisions, including Finance Minister Asad Umar.

The proposals rejected by the Senate panel headed by Senator Farooq H. Naek related to controversial tax recoveries on offshore assets, sale of automobiles to non-filers of tax returns and tax concessions to sports franchises.

Majority of the committee members initially waited for 10 minutes for the economic team to start the proceedings, but were informed by the staff that Finance Minister Umar, Minister of State for Revenue Hammad Azhar, Finance Secretary Arif Ahmed Khan and Federal Board of Revenue Chairman Jehanzeb Khan had to rush to the Prime Minister House for an emergency meeting.

After a brief discussion, the committee decided to suspend the proceedings for 10 minutes to enable somebody from the top leadership to attend the meeting, saying it was customary for the finance minister to at least attend the introductory session, along with the entire team, if not full proceedings.

Standing Committee on Finance cancels its inaugural session in protest against absence of top economic officials

After the 10-minute suspension, special finance secretary Umar Hameed said he had joined the ministry a day earlier and was deputed to represent the finance ministry and the FBR members were available for discussions on the finance bill.

This did not go well with the committee members and even embarrassed the treasury members. As the opposition senators protested over what they called non-serious attitude of the economic team and alleged that the government was intentionally undermining parliament to create a new dictatorial or presidential form of government, Pakistan Tehreek-i-Insaf Senator Mohsin Aziz agreed that the absence of the top four economic wizards was not only sabotaging the good environment of the standing committee but also the very document (finance bill) that promised an economic turnaround.

He said he was part of the committee to protest because the schedule of the committee meetings was finalised in consultation with the economic team and the first session should not have been ignored.

Senators Sherry Rehman, Mian Attique, Imamuddin Shouqeen, Sirajul Haq and Talha Mahmood said it was shocking that the economic team skipped such an important meeting for which sessions of the Senate and National Assembly were delayed to enable the standing committee to go through the finance bill and make recommendations.

Senator Rehman said the PTI was continuously undermining parliament and downgrading its standing as evident from Prime Minister Imram Khan’s absence from parliament even though he had promised to regularly attend question-hour sessions and now Asad Umar was following his leader. She alleged that the government wanted to pass the bill without the mandatory input from the Senate committee or introduce ordinances as indicated by the prime minister, but this would not be possible.

Senator Sirajul Haq said the attitude of the rulers was deplorable and they needed to differentiate between the running of the party and the government. The government could not be run like a party, he said, adding that he would send his recommendations in writing and would not attend the remaining sessions of the committee.

After mutual consultation, the committee decided to cancel the first session that was originally planned for three hours (from 11am to 2pm). Committee chairman Senator Naik said the panel was required to submit its recommendations on the money bill within 14 days of its introduction in the National Assembly and the schedule was finalised with prior consultation, but “unfortunately, the heads of the two relevant divisions did not turn up”.

He said the Senate session had to be delayed even though most of the members were in the capital waiting for the Senate committee to complete its task on a matter that related to the entire nation. The delay in the Senate session and perhaps that of the National Assembly, he added, would have additional financial burden on the national kitty.

The committee in its evening session rejected with 4-2 majority a controversial provision 1A in section 123 of the finance bill under which the FBR could collect 35 per cent tax of the value of an offshore asset not declared by a taxpayer in returns. The opposition senators were of the opinion that the clause was a move to regularise illegal foreign assets even though governments had been sacked on such allegations and appeared to be a continuation of the tax amnesty scheme.

The second session was, however, attended by Revenue Minister Hammad Azhar and the FBR chairman.

The FBR team explained that the clause would help the revenue machinery recover 35pc tax on the asset within a month after finding the assets under exchange of information with 26 countries from where 152,000 cases had been received. This would not exonerate the proceedings of anti-money laundering laws or accountability laws on which other government agencies would be free to continue their process.

The committee unanimously rejected another clause that allowed sale of vehicles of up to 1,300cc engine to non-filers. The committee proposed that the sale of cars to non-filers should be limited to 800cc.

Hammad Azhar said the exemption was allowed because of problems being faced by the automobile sector whose sales plunged by 25-27pc. He said it was a discrepancy that non-filers could be allowed to buy a property of up to Rs5 million, but not a car of 1,300cc and an attempt was made to remove this discrepancy.

He was reminded by his party colleague Mohsin Aziz that in previous meetings the FBR had justified the sale/purchase of a house to non-filers as a basic necessity, while a car of 1,300cc did not fall in that category.

After detailed discussion, the committee unanimously proposed that sale of cars to non-filers should not be allowed beyond 800cc.

The committee also rejected tax concessions to Pakistan Sports League franchises, saying such concessions in loss carry forward were not allowed to any other industry or business. Some senators alleged that the move was introduced to benefit Multan Sultan, a cricket team recently purchased by a ruling party leader.

The committee was informed that about Rs120 billion tax refunds were stuck up with the FBR for years. The government has decided to make cash refunds worth Rs40bn to old cases and clear remaining Rs80bn through three-year promissory notes that could be allowed collateral at a discount rate.

Published in Dawn, January 31st, 2019