'Mini-budget': National Assembly passes Finance (Supplementary) Bill 2021

The National Assembly passed the Finance (Supplementary) Bill 2021, generally known as the 'mini-budget', on Thursday amid objection by the opposition during a hours-long session that began in the evening.

The session resumed under the chairmanship of NA Speaker Asad Qaiser. Prime Minister Imran Khan, Minister for Planning, Development, and Special Initiatives Asad Umar and Foreign Minister Shah Mahmood Qureshi were among the attendees.

According to the agenda, the session was to take up the Finance (Supplementary) Bill, seen as a key condition to revive the $6-billion Extended Fund Facility (EFF) of the International Monetary Fund (IMF).

Finance Minister Shaukat Tarin moved the bill to amend certain laws relating to taxes and duties. The 64-point agenda also showed that Tarin would table the State Bank of Pakistan (Amendment) Bill 2021, seeking its passage.

The mid-year budget will end exemptions on sales tax as part of fiscal tightening and a law to grant its central bank greater autonomy.

Authorities expect ending the tax exemptions will help raise Rs343 billion.

Tarin said the tax was mostly applicable to luxury imported products like cellphones and cars, adding that exemptions for daily-use items like bakery products, formula milk and solar panels would stay.

The parliament also passed a separate law to give the central bank greater autonomy, including independent powers to control price stability, monetary policy decisions and a guaranteed tenure for its governor.

The two bills are key conditions for revival of the IMF programme. The finance ministry earlier this week said that the IMF board will meet towards the end of this month for the sixth review of Pakistan's EFF.

Meanwhile, addressing the session, opposition leaders criticised the government for its economic policies and opposed the mini-budget, questioning the need for amendments when it had conveyed a 'rosy' picture of the state of the economy just a few months ago in the federal budget.

Pakistan Muslim League-Nawaz (PML-N) leader Ahsan Iqbal also called for the House to debate the recommendations put forth by the Senate. He said the recommendations given by the Senate regarding the mini-budget had not been discussed, and termed it an insult to the Parliament.

As the session began, Pakistan Peoples Party (PPP) Shazia Marri also moved a motion recommending that the finance bill be circulated for public opinion under Rule 124 of Procedure and Conduct of Business in the National Assembly so that it could be demonstrated how "anti-people" it was.

However, the motion was opposed by Tarin.

"This is a time for substantive debate," said Tarin. "The opposition should see numbers before commenting on everything. The opposition parties ran governments, but their fundamentals were not right. This country is growing. Our revenues have grown above 35%. Our exports will surpass $31 billion this year."

Tarin added that circumstances forced the government to the IMF. "The fact is that there was no escape from the IMF. We went to our friends but they couldn’t support us as much as we needed."

Read more: ‘Mini-budget’, SBP bill: MNAs expected to cast their vote today

Background

Earlier on Thursday, Ministry of Finance Spokesperson Muzzammil Aslam looked to pacify concerns regarding the Finance (Supplementary) Bill 2021, calling it a "reform budget that would capture the value-chain".

The two bills have generated intense debate in recent weeks with the opposition calling the mini-budget a massive burden on the common citizenry, while criticising the SBP amendments that are aimed at appeasing the IMF, and curtailing powers of the state.

However, addressing a press conference on Thursday ahead of the vote, Aslam said that the upcoming (mini-budget) should be called a reform budget as the common man would bear minimal burden of taxes.

"It is a historic day for Pakistan," said Aslam. "The purpose is to document the economy."

The spokesperson added that Pakistan's retail market worth Rs18 trillion does not pay its fair share of taxes. “The purpose of this ‘reformed budget’ is to capture the value chain, people involved in trading should come under the tax net, to increase the penetration of taxpayers.

"We want to impose taxes on high-income persons and transfer its effects to the masses, as well as simplify the tax system."

Talking about SBP autonomy, Aslam said that the government would appoint eight Executive Board of Directors (BoD) of the central bank.

“Furthermore, the SBP governor and deputy governors will be accountable and the central bank will be 100% owned by the government of Pakistan,” added Aslam.