Bills stalled in parliament: ordinances in 48 hours

Two Ordinances will be promulgated in the next 48 hours that will allow the government to impose taxes proposed in the Finance Amendment Bill 2010 pending for parliamentary approval, informed sources revealed to Business Recorder on Monday.
This lays to rest all speculative stories that the President Asif Ali Zardari was opposed to the proposals agreed between the Ministry of Finance and the IMF team last week. The money bill stalled in parliament sought to impose 15 percent flood surcharge, increase in special excise duty from 1 to 2.5 percent and rescind a number of sales tax notifications to withdraw sales tax exemptions on sugar pesticides, fertilisers and other items.
Sources told Business Recorder here on Monday that the sales tax exemptions and certain zero-rating facilities would be withdrawn through rescinding of the statutory regulatory orders (SROs). In this regard, the Ministry of Finance and Federal Board of Revenue (FBR) have finalised the lists of items on which the sales tax exemptions and zero-rating would be withdrawn. The relevant SROs would be rescinded through notifications to be issued along with the promulgation of the Ordinances. Both the promulgation of the Ordinances and withdrawal of sales tax exemptions would take place simultaneously to generate additional revenue in 2010-2011.
According to sources, the Presidential Ordinance would amend the Income Tax Ordinance 2001 for the imposition of 15 percent income tax surcharge for the Tax Year 2010 or Tax Year 2011. Through another Presidential Ordinance, amendment would be made in the Federal Excise Act to raise the rate of the special excise duty from one to 2.5 percent. Moreover, the government will withdraw the sales tax exemption on sugar by imposing standard rate of 17 percent sales tax on the commodity.
Different sales tax exemptions and sales tax zero-rating facility would be abolished through SROs keeping in view the revenue implications in the remaining months of current fiscal. The 15 percent flood surcharge on withholding tax and advance tax would generate Rs 27 billion. The increase in the rate of the SED from 1 to 2.5 percent would generate additional revenue of Rs 9 billion. The broadening of tax base would generate an additional amount of Rs 5 billion and recovery of arrears would help in collecting Rs 5 billion during remaining months of 2010-11. These proposed revenue and administrative measures would help in collecting nearly Rs 46 billion, sources added.