The Senate Standing Committee on Finance here on Wednesday recommended that the subsidy for the power sector be raised to Rs 500 billion for the upcoming fiscal year 2012-13 as the country''s economy cannot bear the additional burden of Rs 0.5 trillion.
The committee chaired by Senator Nasreen Jalil, opined that the government was not doing enough in the election year and the expectations of the masses are very high, which must be addressed amicably. While discussing the budgetary proposals (2012-2013) forwarded by Senator Tahir Mashahidi, the committee was divided over the huge amount of subsidy for electricity.
Some members of the committee said that the economy of the county can bear the additional burden of Rs 0.5 trillion. Endorsing the idea of power subsidy, Senator Ilyas Bilour said that if the country can bear Rs 1 trillion budget deficit, than an additional load of Rs 0.5 trillion can be absorbed too. While, Senator Tahir Mashahidi said, "The deficit of Rs 500 billion can be covered with the higher economic activity generated due to the availability of electricity."
During the committee''s proceedings, Senator Kulsom Parveen and Senator Sardar Fateh Muhammad said that the officials have failed to identify the economic loss faced by the country due to electricity shortages in country. Responding to the proposal, officials of the finance ministry stated that an additional Rs 500 billion in terms of subsidy would mean increasing inflation from targeted 9 percent in the next fiscal year to 13 percent. "Besides, how can we announce a budget with a 7.7 percent deficit," the additional secretary, finance ministry said. Sughra Imam, was the only member who supported the viewpoint of the government officials as she said that the economy cannot afford to have such huge subsidies.
"It is a very serious issue to have Rs 1.5 trillion deficit only to support energy crisis," Ms Imam said. Amid descent note by Sughra Imam the committee adopted the recommendation for Rs 500 billion energy subsidy during 2012-13, through reducing non-development expenditures.
---- Chief Customs FBR informed to the committee that government has already decided in principle under Tariff Rationalisation Plan to bring maximum import tariff down from maximum 30% to 15% on finished goods, 10% on semi-finished goods and 5% on raw materials and capital goods in next three to four years.
---- The committee recommended elimination of tax on domestic air travel, cash withdrawal from banks, however, FBR officials present in the meeting objected these proposals and said that they have already enhanced the per day cash withdrawal limit from Rs 25,000 to Rs 50,000 per day without payment of withholding tax.
---- Senator Tahir Mashhadi, demanded the government to impose from July 1, 2012 Rs 500,000 additional import duty on luxury vehicles and Rs 100,000 annual additional tax to generate additional resources for pro-poor initiatives and poverty reduction. Some members of the committee also opposed proposed imposition of the Gas Infrastructure Development Cess (GIDC) on CNG.
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