ISLAMABAD - National Assembly’s Standing Committee on Finance and Revenue on Tuesday recommended the government to reduce the standard rate of General Sales Tax (GST) by two percent to facilitate people and also to impose 0.5 percent wealth tax.

The committee, presided over by Qaiser Ahmed Shaikh, also proposed that the government should introduce structural reforms in the Federal Board of Revenue (FBR) to expand tax base of the country. The committee also suggested the government to take measures to make FBR a corruption-free department.

Committee member Asad Umar suggested the reduction in the standard rate of GST from 17 percent to 15 percent, which would decrease the inflation rate in the country. The committee also asked that direct wealth tax/net wealth tax @ 0.5 percent (adjustable) should be charged by the government for increasing the revenue collection. Umar said that this measure would help in generating additional Rs300 billion to Rs400 billion per year.

The committee recommended that 0.8 percent GDP on federal government expenditures for education should be consider, as announced by Finance Minister Ishaq Dar in his last budget speech. The committee also discussed that digital money promotion mechanism should be considered by the FBR and State Bank of Pakistan for increasing the revenue.

Umar opposed the idea of giving amnesty schemes by saying that it would encourage the tax evaders. "The government should give exemplary punishment to the tax evaders in a bid to discourage the habit of tax evasion," he added.

Committee member Syed Mustafa Mehmood accused the committee chairman Qaiser Shaikh for reducing 5 percent GST on chemicals, which are used in his company. However, Shaikh rejected the allegations by saying that 15-20 companies are using this chemical. He proposed that the committee should call representatives of chemical association to listen their viewpoint on it.

The parliamentary committee also decided to call officials of FBR, Federal Investigation Agency (FIA), National Accountability Bureau (NAB) and Securities and Exchange Commission of Pakistan (SECP) for getting their viewpoint on transferring of funds to abroad illegally.

Asad Umar said that Pakistanis had illegally transferred around Rs800 billion to Dubai for purchasing properties during last four years. The committee chairman said that this committee should thoroughly consider the suggestions/proposals received from various business forums/stake holders for onward submission to Finance Division. The committee unanimously decided that its next meeting would be held on April 26, 2017, to discuss the budgetary proposals, exclusively. The committee also decided that stakeholders and FBR would be called in the said meeting.

While considering the suggestions received from Karachi Chamber of Commerce (KCCI), the committee decided that Tax Reforms Commission Report should be discussed in detail in its next meeting, because the committee members were of the view that recommendations of the Karachi chamber have already been addressed in the Tax Reforms Commission Report.

The committee considered the proposals of Pakistan Real Estate Investment Forum (PREIF) and recommended that the government should allow the real estate sector for declaration of actual property value and taxation on the said value should be minimised. The committee also supported the proposals of real estate sector on some extent; however, the committee decided that real estate stakeholders would be invited in the next meeting for further discussion in this regard.

The committee also discussed the proposals received from Cotton Ginners Association and supported the suggestions of the industry. The committee also decided that representatives of Cotton Ginners Association should be called in the next meeting.

The meeting was attended by Shaza Fatima Khawaja, Daniyal Aziz, Pervaiz Malik, Syed Mustafa Mehmud, Asad Umar, Dr Shezra Mansab Ali Khan Kharral, MNAs, besides the senior officers from the Ministry of Finance, SBP and Auditor General of Pakistan.