ISLAMABAD - Showing serious reservations over government's proposal to give power to the tax department to get access to bank database, the Senate Standing Committee on Finance and Revenue rejected the suggestion and asked the government not to incorporate it into the Finance Bill, 2013-14.
The committee members were of the view that money could be transferred to other countries through illegal means if the government gave substantial powers to FBR to get access to bank database containing details of its account holders (having more than Rs1 million) and all transactions made in their accounts through the bill. The committee, which met under its chairperson Nasrin Jalil, discussed the bill and proposed two per cent sales/income tax exemption for Khyber Pakhtunkhwa and FATA. It however withdrew its recommendations about imposing wealth tax, tax on banks, and tax on marriage halls. Also, the committee recommended withdrawal of SRO issued regarding eliminating tax exemption in Khyber and Tribal Areas before approval of the budget.
Rejecting the proposal about reducing general sales tax by one per cent, Finance Minister Ishaq Dar said the committee should give an alternate plan to generate additional Rs60billion if it did not want to increase GST. "We cannot play with economy, as public debt has ballooned to Rs14trillion in 2013 from Rs3trillion in 1999," said Dar while adding the committee should decide whether to stabilise economy or do politics.
He said the government had carried out an exercise in budget to minimise expenditures, as there was almost no increase in current expenditure while ministries expenditures had been slashed by 30 per cent. On the demand of Senator Haji Adeel to cut defence budget by Rs50billion, Dar said the government had already brought it to Rs627billion against desired amount of Rs700billion.
The standing committee was informed by the finance minister the government had prepared a roadmap wherein budget deficit would reduce to 4 per cent in a medium term framework. Budget deficit would come down by 2.5 per cent in next financial year 2013-2014 to 6.3 percent of the GDP that would be brought to 4 percent of the GDP by June 2016. He added the government had increased the GST before approval of the budget under the Provincial Collection of Taxes Act, 1931. "All political parties can sit together to annul this act after the budget, if someone is having concerns over it," Dar said to members of the body.
About the revenue collection, the minister said the government had projected Rs2,475billion target for the next financial year 2013-2014 that would be 23 per cent higher than estimated collection of Rs2007billion of the outgoing fiscal year 2012-2013. The government has to generate additional Rs475billion in next year wherein Rs200billon would come through new taxation measures and the remaining would come through fixing loopholes in the tax department.
About salaries of civil servants, Dar said the government had increased pensions and salaries by 10 per cent.
Nevertheless the minister told the committee the federal government could not collect agricultural income tax since the provinces had been obligated to do this under the Constitution. The provinces could improve tax collection, which stood at only Rs1billion, he added. "The government will clear the dues of power generation companies that would help generate additional 1500MW to 1700MW electricity," Dar maintained, adding “We have been inherited with circular debt of Rs500billion.”
Dar also said the government had allocated Rs75billion for income support programmes, that included Benazir Income Support Programme and six other plans. Similarly, the government had increased the Public Sector Development Programme to Rs450billion from Rs360billion.
In her remarks, committee head Nasrin Jalil said the government had to take steps to broaden the tax base and control lines losses in the country.