Senate Standing Committee holds meeting on Finance Revenue and Economic Affairs

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Islamabad,   (Parliament Times) : The Senate Standing Committee on Finance Revenue and Economic Affairs met the second consecutive day with Senator Talha Mahmood in the chair to finalize and make recommendations in the Finance (Supplementary) Bill, 2021.

The proposed amendment from 1.5pc value of Gold and 2pc value of Diamond plus 3pc of making charges, to 17 % sale tax on articles of jewellery or parts of precious metal has been rejected by the committee unanimously as a consequence of crippling of the documented segment of the Jewellary business and a drastic fall in the tax revenue of the state, similarly, the committee disposed of the petition by the match box industry on the proposed amendment of exemption of tax on matchboxes with the directive to retain the previous regime of sales tax on the matchbox industry on the same analogy of securing the documented industry and increased revenue in the interest of the state. The committee failed to comprehend the analogy behind the proposed amendment which outcome will result in encouraging the undocumented business industry. The committee noted that the proposed amendment is highly discriminatory as it will only affect the sales tax registered companies. It was transpired in the committee that 80 tons of gold are smuggled into the country annually. The Gold Association lamented that Pakistan has no gold import policy and tax system, “Not only gold but also diamonds are being smuggled in”, according to the Progressive Jewellary Groups.

The FBR officials informed the committee that 160 tons of gold are used annually in Pakistan, and the Gold market in Pakistan is around Rs. 2.2 trillion. Only Rs. 29 billion gold market is declared in the Federal Board of Revenue. “Out Of the 36,000 goldsmiths, only 54 pay the Goldsmith tax” the FBR informed.

The committee unanimously rejected the proposed 17pc sales tax on formula milk and other products of a common good stating that such a sales tax affecting the growth and health of infants will bring shame to the country at the National level.

The committee unanimously believed that it needs assurance whether or not, the recommendations of the committee will be acknowledged otherwise it is a futile exercise to spend countless hours debating on the matter without progressive results. “If the financial adviser and his team are not present then who will we put our recommendations to”, Musadiq Malik stated. The chairman Committee assured the committee members that he has spoken to the Finance Minister that the recommendations of the committee should be accepted in letter and spirit. The committee also expressed that the integrity of the committee may be maintained and the presence of the Minister, the Secretary and other high-level officials may be observed, maintaining the dignity and honour of such High-Level Parliamentary meetings. Senator Kamil Ali Agha stated that the Federal Board of Revenue is a malicious entity, “It collects 450 billion rupees annually through various taxation regimes”, he further added. The chairman committee showed his intent to form a committee to examine the tax collectors and inspectors as to where these millions of rupees come from, while their salaries would be Rs. 1 lakh, said the Chairman of the Committee.

The committee gave clause wise reading of the Bill and thoroughly debated on each point in the larger interest of the General Public. The committee reserved discussion on several clauses on account that the data and statistics may be provided on the revenue generated on the previous regime so that it can be studied minutely to understand the rationale behind the proposed amendments.

Earlier in the meeting, the DRAP representative informed as discussed in the previous meeting that the prices of the registered drugs will not be increased according to the new GST regime. The DRAP informed that the drugs of therapeutic value prices will not be increased however the drugs of nutritional value will increase by 17pc sales tax. The committee observed that the Solar panels have also been taxed at 17%, taxes are also being levied on imported bicycles. The Committee proposed non-imposition of tax on up to 25,000 imported bicycles and imposition of duty on more than 25,000 imported bicycles.

17% duty on goods for donation to hospitals, educational institutions and other entity are also going to be imposed, Member FBR informed the committee. Senator Sherry Rehman while expressing her reservations said People will stop donating such goods to hospitals, schools and other institutions. The committee rejected the proposal to impose a 17% tax on donations giving arguments stating that If I donate a machine to a hospital and I have to pay tax on it, I will be reluctant to donate it. The committee also rejected the proposal to impose a sales tax on contraceptive drugs. Contraceptives were exempted from tax in previous finance bills, but are now being brought into the tax net, says FBR member. The committee rejected the proposal to bring contraceptives into the tax net.

The meeting was attended by Leader of the House in the Senate, Dr Shezad Waseem, Zeeshan Khanzada, Farooq Hamid Naek, Saleem Mandviwalla, Sherry Rehman, Mohsin Aziz, Kamil Ali Agha, Masudik Masood Malik, Dilawar Khan, Anwar ul Haq Kakar, Faisal Subzwari and Faisal Saleem Rehman. Chairman FBR, member FBR and senior officials of the attached departments were also in attendance.

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