Federal Board of Revenue (FBR) Chairman Asim Ahmad Thursday said the government will review the taxation measures of Rs170 billion taken through the Finance (Supplementary) Bill, 2023 in the current budget and the FBR’s annual target has been increased from Rs7,470 billion to Rs7,640 billion for 2022-23.
At the conclusion of the Senate Standing Committee on Finance meeting held at the Parliament House on Thursday to review the Finance (Supplementary) Bill, 2023, he informed Business Recorder that the revenue collection target has been increased after additional revenue measures of Rs170 billion.
The IMF is satisfied with the FBR’s revenue collection performance, but we have taken measures of Rs170 billion to bridge the gap of deficit in other areas of the economy, Ahmad said.
The Senate Standing Committee on Finance deliberated and approved the recommendations on the money bill, which aimed to amend the laws relating to taxes and duties.
Finance (Supplementary) Bill, 2023: Dar unveils taxation measures as Pakistan looks to appease IMF
Out of the total 15 members of the committee, only four members attended the committee including senators, Saadia Abbasi, Dilawar Khan, Mohsin Aziz, and chairman of the committee.
The FBR chairman informed the committee that the FBR will issue a list of luxury items on which 25 percent sales tax would be imposed at the import stage. The FBR will issue the notification with the approval of the federal government. Mostly these are the same items, which were initially banned and later higher rates of regulatory duties were imposed on the import of these items.
Ahmad revealed that the list of luxury items included cosmetics, imported vehicles, furniture, sanitary fittings, chocolates, home appliances, crockery, perfumes, and many others.
FBR Member Inland Revenue (Policy) Afaq Ahmed Qureshi said that the FBR has the power to increase the rate of sales tax after approval of the federal cabinet like powers to change sales tax rates on petroleum products.
To a query, the FBR Member Inland Revenue (Operations) stated the FBR will not determine the fair market value of the shares proposed to 10 percent withholding tax at the time of sales of shares of companies.
The committee recommended a decrease in the Federal Excise Duty (FED) on juices from the proposed 10 percent to five percent.
Senator Mohsin Aziz of the PTI made a hue and cry and rejected the money bill and Senator Saadia Abbasi of the PML-N apprehended that the taxation measures would result in inflation and will put an additional burden on the masses.
Senator Mohsin Aziz expressed concern about the Rs170 billion additional taxation measures, questioning whether it was just taxes or in fact, a Rs520 billion mini-budget. He argued that the government should explain why it took so long for the bailout deal and make public how many taxes were imposed due to pressure from the International Monetary Fund (IMF).
The FBR chairman stated that the prime minister has approved to giving a supervisory role of anti-smuggling to the FBR. The federal government will issue a notification to designate the FBR as the lead agency for supervision and coordination with other law enforcement agencies.
Furthermore, representatives of Murree Brewery and Shezan enterprises apprised the committee that the government has increased the FED on sugary fruit juices and squashes from zero to 10 percent and this sudden increase is not justifiable.
The FBR chairman commented that sugary drinks are injurious to health and owing to the WHO recommendations in this regard, the government has increased the FED on carbonated water from 13 to 20 percent, however, there was discrimination due to zero per cent FED on fruit juices.
Similarly, to curtail the usage of tobacco as per the global practices, the government has increased the tax per 1,000 cigarettes from Rs6,500 to Rs16,500.
The committee also recommended fixing the rate of the FED on region-wise basis on air tickets of business, first class, and club class. The airlines would not be able to effectively calculate the FED of 20 percent of the gross amount of each ticket due to the existing system available with them.
Senator Saleem Mandviwalla apprised the Finance Division that the Aviation Ministry has written a letter to the committee and expressed reservations on 20 per cent tax on Business Class and First Class tickets. The Aviation Ministry commented that the proposed tax is not workable because the fare of tickets are not static and vary from time to time. Senator Mandviwalla suggested that instead of imposing a 20 per cent tax, a definite amount should be fixed for each destination.
The Senate body was informed that the Ministry of Finance and Revenue has increased the GST from 17 to 18 per cent on products bearing a retail price. Ahmad, the chairman FBR stated that the FBR was not empowered earlier to increase the sales tax on these items and that was why the ministry put forward this bill which results in empowering the FBR to increase tax on items bearing a retail price.
Senator Saadia Abbasi rejected this provision of the bill.
Moreover, the chairman committee apprised that the sales tax on cellular devices worth US$200 to US$500 have been increased from 17 per cent to 18 percent and the sales tax on cellular devices exceeding US$500 have been increased from 17 to 25 percent.
Senator Mohsin Aziz suggested that a ban should be imposed on luxury items being imported from abroad rather than increasing taxes on them, also this tax will only encourage the smuggling of these items.
In reply, Dr Aisha Ghaus Pasha, State Minister for Finance and Revenue, commented that the ministry intended to put a ban on the import of luxury items but could not do so because of restrictions of the WTO and as far as smuggling of these luxury items is concerned, the FBR is in collaboration with Frontier Corps and other agencies to curb the smuggling of said items along the western border.
Additionally, the FED on per kilogramme of cement has been increased from one rupee 50 paisas to two rupees, the Senate body was told.
While discussing the proposed tax on functions and gatherings, the FBR chairman apprised that individuals have to pay 10 percent withholding tax to avail the services of banquet halls.
Mandviwalla said the majority of banquet halls are not even registered with the FBR.It was further recommended that before imposing tax, the government should make efforts for the registration of marriage halls.
Senator Mandviwalla reiterated that this bill will only burden the taxpayers of the country. He proposed that the government should take measures to bring non-taxpayers under the ambit of the FBR.
