The National Assembly on Thursday pass the controversial Finance (Supplementary) Bill, generally known as the "mini-budget", and the State Bank of Pakistan (Amendment) Bill 2021 during an hours-long session amid fierce objection from the opposition benches.
The finance bill and the SBP bill, both tabled on Dec 30, are necessary to ensure that Pakistan’s sixth review of the $6 billion Extended Fund Facility gets cleared by the International Monetary Fund’s (IMF) executive board.
The session, which began shortly after 4pm, resumed under the chairmanship of NA Speaker Asad Qaiser. Prime Minister Imran Khan, Planning and Development Minister Asad Umar and Foreign Minister Shah Mahmood Qureshi were also in attendance.
PM Imran was welcomed by loud sloganeering from the opposition benches as treasury lawmakers thumped their desks to drown them out.
Govt amendments approved
The government's amendments to the proposed bill were approved by the NA. In addition, amendments to the finance bill were also moved by MQM MNA Kishwar Zahra, to which the finance minister replied that most of the demands had been accommodated. In response, the MQM MNA thanked the premier and the foreign minister and withdrew the amendments.
The government introduced changes to Clause 3 of the bill, under which small shops will not be taxed on bread, chapattis, sheermal, naans, vermicelli, buns and rusk. Tier one retailers, restaurants, food chains and sweet shops will be taxed on the sale of these items.
A sales tax of 8.5 per cent will be imposed on 1,800 cc domestic and hybrid and domestic cars. A tax of 12.75pc will be imposed on 1,801 to 2,500 cc hybrid vehicles while imported electric vehicles will be taxed at 12.5pc.
No general sales tax will be imposed on a 200g carton of milk, while a 17pc GST will be imposed on formula milk worth more than Rs500. Tax on imported vehicles was also increased under the changes, from five per cent to 12.5pc. The federal excise duty on all imported vehicles will remain the same.
There will be a duty of 2.5pc on locally manufactured 1,300 cc vehicles, down from the 5pc proposed earlier. The duty on locally manufactured 1,300 to 2,000 cc cars was also reduced to 5pc from 10pc. A 10pc duty will be imposed on locally manufactured cars greater than 2,100 cc.
The government's amendments to Clause 5 and Clause 6 were also approved during the session.
Opposition amendments rejected
Shortly after the session began, PPP's Shazia Marri moved a motion recommending that the finance bill be circulated for public opinion under Rule 124 of Procedure and Conduct of Business in the National Assembly so that it could be proven how "anti-people" it was.
However, the motion was opposed by Finance Minister Shaukat Tarin.
The opposition lawmakers also called for the House to debate the recommendations put forth by the Senate. PML-N's Ahsan Iqbal said that the recommendations put forth by the Senate regarding the mini-budget had not been discussed and called it an insult to the upper house of Parliament.
Voting also took place on several amendments moved by the opposition to the finance bill that were subsequently rejected through a voice vote.
The opposition demanded that a physical count be conducted for some of the amendments tabled by the opposition, including those by Mohsin Dawar and PML-N's Shahid Khaqan Abbasi. However, the NA speaker refused under Rule 29 of Procedure and Conduct of Business in the National Assembly.
A physical count was later conducted on the amendments moved by PPP's Marri, with 168 lawmakers against it and 150 in favour of it.
Later, a physical count was conducted for a second time. The government was once again in majority and the amendments were rejected. The opposition's amendments to Clause 3 of the finance bill were rejected with 163 votes against it and 143 in favour.
Need for mini-budget questioned
During the session, Abbasi questioned why it was necessary for the government to introduce a mini-budget and said that such a massive tax burden had never before been presented in the country's history.
"It has been six months since you passed the finance bill. Have your revenues declines or expenses increased since then?" he asked. He also questioned why the people were being burdened with additional taxes of Rs350 billion.
In response, Tarin said that the IMF had called for imposing a value-added tax when he had previously served as the finance minister. He also emphasised the need for documenting the economy, stating that people's incomes were not being taxed because they didn't fall under the tax net.
He added that some of the taxes in the mini-budget had been removed, informing the opposition that this was about "documentation not taxes".
Bilawal takes on Tarin
PPP Chairman Bilawal Bhutto-Zardari said that the amendment he introduced concerned taxes on crude oil and imported items. "My question to the finance minister is whether they have accepted this. He himself said that they are withdrawing some of the taxes."
He questioned whether the finance minister had an issue with the fact that it mentioned his name and those of Shazia Marri and Raja Pervaiz Ashraf. "What was the harm in it being accepted?"
Referring to the finance minister, Bilawal said that Tarin stated that past governments had made matters worse even though he had previously served as the country's finance minster.
"Tarin said he did not know why there was hue and cry [over the mini-budget]. We request him to visit the streets of Karachi and ask the people about their economic situation."
The PPP chairman said that some Karachi lawmakers had moved amendments and had also expressed their reservations regarding the mini-budget. He called on them to reject the finance bill and work with the opposition to steer the country out of the economic situation.
Responding to the PPP chairman, the finance minister said the opposition had claimed that the government was sacrificing the country's economic sovereignty and national security.
"But they went to the IMF approximately 13 times. Did they forfeit our economic sovereignty each time?" he asked.
Taking the floor once again, Bilawal said that the finance minister had claimed that he did not renege on the promises he had made.
"But neither the finance minister nor the prime minister stick to their promises." He said that this was the time to show the people the government's success in running the country before the next elections.
"But what is your success? The Economist says that Pakistan is the fourth most expensive country in the world, the most expensive in the region." He said that the inflation had risen to double digits and while the debt to GDP ratio had also soared.
This is the what Naya Pakistan has delivered, he said.
Opposition up in arms over 'bulldozing' of SBP bill
Shortly after the NA passed the mini-budget, the opposition benches were up in arms against the "bulldozing" of the SBP bill and called for holding a detailed discussion after the speaker suspended the rules for debate.
Addressing the speaker, PML-N's Ahsan Iqbal called on him to not suspend the rules of the House. "If you suspend the rules and bulldoze the bill in the darkness of the night, then your name will go down in history among those who conspired to sell the country's economic sovereignty."
He urged the speaker to let lawmakers discuss the bill for two days.
Former prime minister Shahid Khaqan Abbasi said that the SBP bill was not in the country's interest. He said that the opposition was ready to debate the bill today and tomorrow.
Taking a dig at the government, PPP Chairman Bilawal Bhutto-Zardari said that it was very rare to have the premier and the entire front row of the treasury benches in attendance. He reiterated calls for a detailed debate.
"This bill says that Pakistan's defence expenditure will have just one bank account and all expenditures will be made through that account," he said, adding that this would make it easier for "international forces" to scrutinise the country's defence and nuclear expenditure.
The opposition began to chant slogans and surrounded the speaker's dais, who then initiated voting on all the amendments by the opposition which were subsequently rejected. The opposition's amendments were presented by the speaker after lawmakers resorted to chanting slogans against the government.
Following this, a clause by clause vote was initiated on the bill, all of which were approved by the House.
PTI allies voice opposition over new taxes
On Tuesday, the NA had formally began a general debate on the mini-budget which saw the coalition partners in the ruling alliance under the PTI joining their voices with the opposition over possible implications of the new taxation measures which, according to them, would bring more economic miseries for the people of the country.
Taking part in the debate which was formally opened by Opposition Leader and PML-N president Shehbaz Sharif, the members belonging to the Muttahida Qaumi Movement (MQM) and the Grand Democratic Alliance (GDA), the allies of the ruling PTI, complained that they were not consulted before introducing the mini-budget and asked the government to withdraw taxes on daily use items.
In addition, Shehbaz and Bilawal both castigated the government for its economic policies and said that it was burdening the common man through the taxes that would be introduced under the mini-budget.
Article 73 of the Constitution deals with the “procedure with respect to money bills”, which are only required to be passed by the National Assembly, the lower house of parliament.
However, Article 73(1) states: “Notwithstanding anything contained in Article 70, a money bill shall originate in the National Assembly, provided that simultaneously when a money bill, including the finance bill containing the annual budget statement, is presented in the National Assembly, a copy thereof shall be transmitted to the Senate which may, within fourteen days, make recommendations thereon to the National Assembly.”
These recommendations, however, are not binding for the National Assembly and it can approve a money bill even without considering it.
Initially, the government had a plan to get the bill passed from parliament before the Jan 12 meeting of the IMF. However, it later emerged that the Fund had accepted Pakistan’s request to postpone the review of its $6bn loan programme which is now expected to take place either on Jan 28 or 31.
The NA speaker had declared on Dec 30 that the finance bill would not be referred to the standing committee and it would be debated in the house, whereas he sent the bill seeking to provide “operational and financial autonomy” to the State Bank of Pakistan to the house committee concerned for a report.
More to follow