ISLAMABAD, Aug 28: A Senate body on Thursday expressed concern over the high government borrowings and observed that the Debt Limitation Act is not being adhered to.

The Senate Standing Committee on Finance, Economic Affairs and Revenues, which met here under the chairmanship of Senator Ahmed Ali, also expressed its concern over the fact that the government money was being kept in private banks instead of the National Bank of Pakistan (NBP) by the various ministries and divisions and called for an immediate end to this practice.

The committee stressed that private banks should not thrive on public money. Senator Ishaq Dar termed this practice as scandalous. Some members of the committee said that external debt had risen to a dangerous level and something has to be done in this regard.

The committee, which was given a presentation by the Federal Board of Revenue (FBR) on the progress made in revenue collection for the financial year 2008-09, paid glowing tributes to the outgoing chairman FBR Abdullah Yousuf for his meritorious services in bringing about a sea change in the tax collection machinery and changing the whole complexion and culture of the organisation from coercive techniques to the people and businessmen-friendly one.

The committee took exception to the manner in which the ex-chairman FBR was removed, noting that though the government has the right to remove him yet the manner in which this right was exercised left much to be desired. The meeting recognised and appreciated the efforts of the FBR in streamlining and enhancing tax collection on the whole.

Senator Haroon Khan was of the view that the tax collection had improved due to 24 per cent inflation and 25 per cent loss in value of the rupee. It was, therefore, necessary to raise the targets for the current fiscal year.

Prof. Khurshid Ahmad said that the tax-to-GDP ratio was yet to register any significant increase and it continued to be one of the lowest in the region. This is a cause of concern and the economic managers must address this issue by broadening the tax base to turn the economy around.

Senator Safdar Abbasi observed that levying 16 per cent Sales Tax across the board was coercive and too much to be endured by the general public. Senator Nisar A. Memon suggested that the professionals like doctors, engineers, lawyers, and consultants etc be brought into the tax nets.