Senate Standing Committee on Finance recommendations in the Finance Bill (2013-14) were forwarded to the National Assembly on Friday recommending State Bank of Pakistan (SBP) access to Swiss bank accounts of Pakistanis, restoration of fiscal relief package for Khyber Pakhtunkhwa, Fata/Pata, income tax on all agricultural produce and taking away proposed powers of FBR to access bank's central database.
Senate committee has recommended comprehensive amendments to the Finance Bill (2013-14) to the National Assembly including making public parameters for selection of cases for audit through computer ballot. In its recommendations to the National Assembly here on Friday that the Senate has recommended changes in the Income Tax ordinance 2001, Sales Tax Act 1990, Customs Act, 1969 and Federal Excise Act 2005.
The Senate recommended to the National Assembly that if the government is sincere & serious in catching the real tax-evaders, then Fairness & justice demand that money held by Pakistanis in secret accounts in Swiss banks and overseas accounts be made accessible to SBP, because that is where the 'big fish' have placed their accounts. There is already a precedent since the United States government asked for details of secret Swiss Bank accounts of American citizens to catch tax evaders. This proposal may also be included in the Budget.
It recommended withdrawal of the raise in the General Sales Tax, as it would raise prices of all commodities which would adversely affect the common man. Moreover, the Senate recommended to the National Assembly that all those sections and clauses included in the Finance Bill, 2013 that are not within the purview of a money bill should be dropped.
The Senate has recommended to the National Assembly that the proposal for FBR access to all bank accounts in Pakistan is too intrusive, against privacy of individuals and is prone to abuse & misuse since FBR is itself susceptible to corruption, as even stated by Chief Justice of Pakistan. It will likely lead to loss of confidence of Pakistan's people in their own banks, almost similar loss of confidence is suffered due to seizure of foreign currency accounts after the 1998 nuclear tests. This proposal should, therefore, be withdrawn.
Senate has recommended the National Assembly that SRO 500 (1)/ 2013 and SRO 503 (1)/ 2013 which seek to withdraw concessions available to 13 districts of Khyber Pakhtunkhawa, Fata and Pata. These SROs may be withdrawn immediately. The Senate recommended that the lowest taxable income slab be kept at Rs 500,000 instead of Rs 400,000. It recommended enhancement in the rate of import duty on cosmetics. It has been recommended that the current proposal for salary taxation is regressive and not acceptable. It may be reviewed to be made more equitable.
The Senate recommended that Finance Bill has proposed that the parameters for selection of audit through computer balloting by the FBR shall remain confidential. This is against the principle that the tax system should be fair, transparent and easy to understand. Taxpayers are entitled to know what the parameters for selection of audit through computer balloting are. FBR must make these public.
The Senate recommends to the National Assembly that as Finance Bill has proposed reduction in minimum tax liability of those persons engaged in the distribution of cigarettes, and cigarette smoking has scientifically been proven to be injurious to health. The proposed changes may be withdrawn.
It recommended that the charge of withholding tax on corporate structure basis of the business is punitive and against the spirit of withholding tax regime. Withholding tax rates have always been defined items/products supplied and on the basis of resident or non-resident taxpayer basis. The choice of corporate structure is a business decision of an individual/individuals which may not be questioned for withholding purposes. Further, firms are not allowed under constitution of Pakistan to incorporate as companies, eg, Chartered accountant firms are not allowed by operation of law to incorporate company.
The Senate recommended that the Income Tax be levied on all agricultural produce and on all agro based industries, ensuring exemption for low income farmers and agricultural producers/cultivators.
The Senate recommends to the National Assembly that the procedure of sales tax refund for retailers, which is very complex, be simplified. It further recommended that the procedures of 50 percent concession on sales tax refund allowed to retailers in Khyber Pakhtunkhawa be simplified.
It is recommended that the proposed amendments in the Budget that suggests to impose extra taxes of different types of supplies to or purchases from unregistered persons may be replaced with the following, "A nominal percentage of withholding tax (say 0.001 percent) should be imposed through banks on all kinds of outward remittances made by any bank account holder to a bank account of a registered person or deposit of cash by any CNIC holder in the account of registered person. This will enable FBR to compile data of business payments made by any un-registered person to a registered person. On the basis of data collected from banks, FBR must initiate proceedings to register those un-registered persons who are required to be registered under the sales tax rules 2006. FBR's website should be made helpful for the banks to identify the registered persons at the time of making any remittance or depositing cash to its account."
The Senate recommends to the National Assembly that revision of return before assessment shall be the right of assesses. If the revision is done voluntarily before issuance of notice on it the Commissioners' prior approval should not be required. It has been recommended that empowerment of commissioner to conduct audit of assesses is purely a judgment for which many reasons may be recorded. It would be more pertinent that the power be given to the Chief Commissioner instead of the Commissioner.
The Senate has recommended to the National Assembly that uncertain external revenues (eg the anticipated revenues expected from auction of 3G License, Coalition Support Fund, outstanding dues from Etisalat) should not be included in the revenue receipts of the annual budget.
It has recommended that the block allocation of Rs 115 billion in the PSDP for development initiatives should not be included without specifying approved projects. Only approved projects should be included in the Budget. The Senate has recommended to the National Assembly to evolve a package for overseas Pakistanis, which should include reduction of custom's duties on household items, vehicles up to 1000 c.c., and acquisition of estate, land for industrial/commercial and residential purposes.
The Senate recommends to the National Assembly that there should be money allocated for a Special Fund for Victims of Drone Strikes in the budget: Compensation for dead persons or whose houses are destroyed, medical treatment for wounded, Education for orphans who lost parents in drone strikes. This can be called Special Fund for Drone Victims. This will also send the right message to the outside world that we are serious on opposing the Drone Strikes & that there is no longer any dual policy on drone strikes as in the past (condemning publicly but condoning privately).
The Senate recommends to the National Assembly Sub-Clause 17(c) of the clause (4) of the Finance Bill, 2013 authorises appointment of an officer in BPS-17 with 15 years experience as Judicial Member of the Appellate Tribunal. This may result in appointment of junior officers in BS-18 or 19 as Judicial Member which will compromise the effectiveness of the Appellate Tribunal. It is therefore proposed that only officers in the BS-20 or above who are Law Graduates may be appointed as Member Judicial.
The Senate recommended to the National Assembly that FBR should introduce 'FBR privilege Card' for compliant taxpayers who significantly contribute to national exchequer. The said privilege card should be provided to individuals and corporate units with the benefits including but not limited to availability of finances at discounted rates, travel privileges, easy processing of utilities connections, incentives to investment in new business ventures, exemption of taxes on royalties and technical fees for bringing new technologies in the country, reduced rates of taxes on dividends. The FBR privilege Card should be given to corporate sector which contributes over Rs 200 M in national exchequer. For individuals, it should be given on Rs 5 M or more paid in income taxes.
It further recommended that revision of return before assessment shall be the right of assesses. If the revision is done voluntarily before issuance of notice on it, the Commissioners' prior approval should not be required.
The Senate recommended that empowerment of commissioner to conduct audit of assesses is purely a judgment for which many reasons may be recorded. It would be more pertinent that the power be given to the Chief Commissioner instead of the Commissioner.
The Senate recommends to the National Assembly that to clear the four times throw forward liability of the actual PSDP, 80 percent PSDP may be allocated to an ongoing project while 20 percent should be earmarked for new projects. Fast Moving Projects should be given priority for completion to create a space for new projects in the forthcoming PSDP.
It recommended that given the security threat posed by snooping & spying by the US through their secret agencies like CIA & NSA, especially of Pakistan which is the second highest in their list of countries being spied online, money should be allocated in the Budget for a Cyber Security Strategy since Pakistan is a victim of Cyber Warfare and Cyber aggression. This should be entrusted to a Cyber Security Task Force, specially constituted for the purpose that can then propose counter measures. Its Secretariat should be in the Ministry of IT.
The Senate recommends to the National Assembly to improve equity in taxation system by increasing the direct and indirect tax ratio to 45:55 from 35:65. Senate recommended that the Medium Term Budgetary Statement presented as part of the Federal Budget includes three-year rolling targets for macroeconomic indicators. In order to encourage broadening of the tax base, targets for number of taxpayers filing income tax returns may also be set and people with NTN must be made to file their returns.
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