• Dar says Rs170bn additional taxes ‘unavoidable’, claims IMF wanted Rs850bn revenue collection
• Proceedings continue even after opposition points out quorum
ISLAMABAD: Despite clearly lacking quorum, the National Assembly after a lackluster debate on Monday passed the IMF-dictated Finance (Supplementary) Bill 2023, seeking to impose additional Rs170 billion taxes with minor amendments as Finance Minister Ishaq Dar held the mismanagement in the power sector and poor economic policies of the previous PTI regime mainly responsible for this economic burden on the masses.
In his winding up speech on the finance (supplementary) bill, generally known as the mini-budget, the minister informed the house that the International Monetary Fund (IMF) initially wanted the government to raise more than Rs800bn from tax and non-tax measures and that it took him and his team 10 days to convince the Fund to bring it down to the minimum level of R170bn.
Before presentation of the bill in the parliament on Feb 15, the government had already implemented Rs115bn worth of taxes through two notifications issued on Feb 14. Now, after a formal assent by President Arif Alvi, the remaining Rs55bn tax measures would come into effect.
All the amendments moved by the opposition members, mostly by Maulana Abdul Akbar Chitrali of the Jamaat-i-Islami (JI) and Saira Bano of the Grand Democratic Alliance (GDA), were rejected through a voice vote. At one point of time, Maulana Chitrali pointed out lack of quorum in protest when Speaker Raja Pervaiz Ashraf switched off his mike, but the latter did not order a headcount and continued the proceedings.
Through their amendments, the opposition members had suggested reduction in the general sales tax from 18 per cent to 16pc, besides withdrawal of proposed taxes on wedding ceremonies at the marriage halls and sugary drinks.
Responding to the criticism on the government’s move to impose tax on marriage halls and an attempt by Maulana Chitrali to link it with religion, Mr Dar said he knew that Pakistan is an Islamic country, but right now it is in difficulty and these taxes are “unavoidable”. He said the house should appreciate him and his team which fought with the IMF for 10 days and with great difficulty finally managed to convince the IMF on imposition of Rs170bn taxes, instead of Rs850bn.
“One of the reasons for which we should be worried about is that our power sector is bleeding. Our cost of producing electricity is Rs3,000bn whereas we are able to collect only Rs1,550bn. Power theft, line losses and non-payment of bills are mainly responsible for non-recovery of Rs1,450bn,” said Mr Dar in his concluding speech before a final vote on the bill.
The minister refuted the impression that the new tax measures were being taken because of the failure of the Federal Board of Revenue (FBR) to meet its tax-collection target, adding that they had completely satisfied the IMF that the tax-collection speed was correct and on track.
Mr Dar admitted that the price-hike in the country was becoming unbearable for the people, but said: “Is it the result of [the policies of ] few months? It is the result of the [past] mismanagement, misgovernance and destruction of the fiscal discipline and monetary policies.”
In the year 2016-17, the minister said, Pakistan was the 24th largest economy of the world and “today we are at 47 position.” He said the PTI government did not fulfill commitments with the IMF and sabotaged the economy before its ouster. He said it was the obligation of the state to honour the agreement signed with the IMF so the present government was implementing it.
Claiming that the new revenue measures would not affect the poor segments of society, he said the government had proposed a Rs40bn increase in the budget of the Benazir Income Support Programme (BISP).
Mr Dar informed the lawmakers that Prime Minister Shehbaz Sharif would soon come to the house to announce plan to reduce the government expenditure and austerity measures.
The minister said on the recommendation of the Senate Standing Committee on Finance, the government had agreed to amend the proposal of imposing 20pc Federal Excise Duty (FED) on the air tickets for the business, club or first class or Rs50,000 whatever higher, and now a fixed amount would be collected from those travelling to various world destinations in three different categories as per the International Air Travel Agency (IATA).
According to the minister, a fix amount of Rs250,000 will be collected from the passengers travelling to Canada, South America and North America, Rs75,000 from those travelling to Middle East and Africa and Rs150,000 for the passengers going to Europe, Australia, New Zealand, Pacific Islands and Far East.
Another amendment, he said, was being made in the provision regarding imposition of duty on cigarettes to prevent tax avoidance. Now, he said, every cigarette brand would pay the duty as per category which it had been paying before the introduction of the supplementary bill. Similarly, he said, the government was making some technical changes for imposition of tax on the shares which were not traded through stock exchanges.
The minister said that he would make every effort to include the proposals given by the members in the federal budget for the fiscal 2023-24. He expressed the hope that the country would come out of the economic quagmire and Pakistan would soon be on the path of progress.
Taking the floor after the passage of the bill, Ms Bano said who would collect tax from the cigarette manufacturers as most of the factories were operating in the tax-free zones. Similarly, she asked the minister if the government collected taxes from big private hospitals and brands of clothes and cosmetics.
The minister responded that the brands, cosmetics and luxury items would become costlier after signing of the bill by the president.
The speaker later adjourned the proceedings till Wednesday evening.
Published in Dawn, February 21st, 2023