ISLAMABAD - The Senate Standing Committee on Finance on Thursday expressed concerns over the government’s proposed measures in the budget for next fiscal year as these would fuel the inflation rate in the country, which is already very high.
The Senate committee continued its deliberations on Finance Bill 2019-20 for fourth consecutive day under chairmanship of Senator Farooq H Naek here at Parliament House. The committee members from the opposition parties noted that government had introduced such measures in the budget, which would increase the inflation rate. They said that people are already suffering due to the higher inflation rate in the country. The committee recommended the government to withdraw the measures, which would affect the common people.
However, the government defended the measures by saying country is in need of taxes. The committee has also rejected the government’s measure of increasing Federal Excise Duty (FED) on cement. Cement is chargeable to federal excise duty @ 1.5 per kg. It is now proposed to increase federal excise duty on cement to Rs. 2 per kg. This would increase the 50kg cement bag rate by Rs25. Meanwhile, the committee has also rejected the increase in FED on LNG. Presently, FED on LNG is payable at Rs. 17.18 per 100 cubic meters. The government has proposed to increase FED on LNG from Rs. 17.18 per 100 cu. m to Rs. 10 per MMBTU bringing it to same level as for local gas. The Senate’s committee has approved to reduce the non-development budget to control the soaring budget deficit of the country. It has also recommended increasing taxes on agriculture sector and reduction in government’s expenditures.
The Federal Board of Revenue (FBR)’s officials informed the committee that they had received information from 17 banks regarding account details. The government would start taking action against non-taxpayers from July 2019. The FBR has planned to double the number of taxpayers from existing two million. They further informed that there are 50 million bank accounts in the country. However, only 0.8 million out of 50 million are registered with the FBR.
The committee has also discussed that proposal of increasing tax rate for services with reduced rate of 2 percent of the total turnover to 4 percent of the gross amount of turnover. The committee has recommended increasing the rate to 3 percent instead of 4 percent as proposed by the government in the annual budget for next fiscal year. The committee approved the proposal of increasing Federal Excise Duty (FED) of Rs5,200 on every 10,000 cigarettes. This would help in increasing the tax revenue from Rs114 billion in outgoing fiscal year to Rs147 billion in next fiscal year.
The Senate Standing Committee on Finance has also recommended increasing the salaries of civil servants by 15 percent. The committee has suggested that civil servants from grade 1-16 should be exempted from the income tax. It has proposed to reduce FED on the vehicles up to 1000cc. The Senate’s panel has asked the FBR to issue tax directory of the rich people who are not paying their taxes instead of those who are paying taxes.
