National Assembly budget debate: opposition rejects one percent increase in GST rate

Opposition in the National Assembly on Monday vehemently rejected the increase in General Sales Tax (GST), saying that it is unconstitutional to implement the proposed increase before the passage of budget for financial year 2013-14 from the Parliament.
The Federal Board of Revenue (FBR) notified the proposed one percent increase in GST on the very second day of the budget speech of the Finance Minister Ishaq Dar on June 12 despite the fact that budget proposals could not be implemented till the passage of the budget from the Upper and lower house of the parliament, the lawmakers maintained.
Resuming debate on the budget for the financial year 2013-14 in the National Assembly, Shazia Marri of Pakistan People's Party Parliamentarians (PPPP) alleged that the government wanted to loot the poor by increasing GST. People were hoping some relief in the budget, but prices of different commodities increased on the very next day of the budget speech, she lamented. She said introduction of new taxes and elimination of subsidy would cause more problems for the masses and increase prices further.
Expressing concern over allocation of Rs 120 billion under special initiatives in the budget for the FY 2013-14 without any justification, she said the House should be informed about the allocation and its utilisation in details.
She also called for improvement in mechanism of tax collection, saying that the government would not be able to achieve the target of Rs 2400 billion without bringing reforms in tax collection system. Shah Mehmood Qureshi of Pakistan Tehreek-e-Insaff (PTI), while taking part in the discussion, said that the one percent increase in GST would have 2.5 percent impact on overall inflation.
Commenting on the government's Medium Term Development Framework that foresees growth rate of 7 percent, Rs 20 billion foreign exchange reserves, raising investment to GDP ratio to 20 percent and single digit inflation, Qureshi said that the strategy presented by the government to achieve these results did not support the framework.
On the issues of circular debt, he said that the government should focus on resolving the basic issues including electricity theft, non-recovery of bills and mismanagement in Discos to resolve the circular debt issue forever. He maintained that allocating funds to resolve circular debt within 60 days would not end this vicious cycle.
Chief of Qaumi Watan Party (QWP) Aftab Ahmad Sherpao said that it would have been better had the government announced increase in salaries of government employees in the budget speech. "The government should have enhanced salaries of the employees at least by 20 percent despite financial constraints," he added. Sherpao said that prices of ghee, sugar and tea had already been increased with the announcement of increase in GST.
He said that people of Khyber-Pakhtunkhwa and FATA had rendered supreme sacrifices in war against terror and millions of people were compelled to leave their houses. However, the government announced to withdraw incentives given to some districts of KP and FATA without consulting various chambers of commerce of the provinces.
He said that over 1000 industrial units had already been closed, resulting in unemployment of around 25,000 workers associated with these units. Sherpao said they were expecting that the government would also announce special packages like given to Balochistan and Larkana. Nawab Muhammad Yousuf Talpur of the PPP said that one percent increase in GST would further overburden the people and prices of all commodities would go up. He said that the government has started collecting the enhanced GST, while it was yet to be passed by the House. He said that no tax or levy could be imposed without prior approval of the parliament.
Agriculture is considered as a backbone of the country, but the government has not introduced any concrete measures in the budget 2013-14 for the sector, adding that the government should focus on organic fertiliser and discourage chemical fertiliser. "It is the need of the hour that training should be given to the farmers to bring improvement in the agriculture system of Pakistan," Talpur added.