FATA, PATA: Senate body proposes two-year extension in Prime Minister's package

Despite strong resistance of the Federal Board of Revenue (FBR), the Senate Standing Committee on Finance here on Monday proposed two years further extension in the special Prime Minister Minister's fiscal relief package for the businessmen and investors of the Khyber Pakhtunkhwa (KPK) and tribal areas.
Senate Standing Committee on Finance unanimously approved recommendations to allow two years extension in the Prime Minister's fiscal relief package announced for the manufacturers, traders and other categories of businessmen operating in the war-affected areas of Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA). The PM package pertaining to income tax would be expired on June 30, 2012. There is a need to further extend the package for a period of two years.
When Senator Ilyas Bilour explained the rationale behind extension in the PM's fiscal-relief package beyond June 30, 2012, Federal Board of Revenue (FBR) Chief Inland Revenue Policy Dr Muhammad Iqbal opposed the proposal saying that the committee has recommended uniform application of tax laws across the country. If the government would give duties and taxes exemption to a specific area of the country, it would not be in line with the proposal of the committee for uniform applicability of taxes without discrimination all over the country.
Dr Muhammad Iqbal further stated that on one hand the committee has recommended that all persons having annual income above Rs 400,000 irrespective of source of income should be brought into the tax net. At the same time, the committee has further recommended that equal treatment of taxes across the country. Keeping in view these viable recommendations, two years extension in the PM's fiscal relief package for the KPK and FATA/PATA would be a 'paradoxical recommendation'. The government should adopt a uniform approach for applicability of taxes in all parts of the country. It would not be appropriate to create separate 'Islands' of tax heaven, FBR Chief Inland Revenue Policy added.
Dr Muhammad Iqbal further termed this recommendation as against the basic principals of taxation. Responding to the observations of the FBR's senior tax official, Senator Ilyas Bilour stated that the PM had announced the tax incentive package for mostly and moderately war-affected areas of KPK and FATA/PATA. The fiscal relief package would expire on June 30, 2012, but the war against terrorism has not been ended and it is still going on in these war-affected areas. Most of the manufacturing premises and industries have been closed in the war-affected areas. Thus, the package should be extended beyond the period of June 30, 2012.