ISLAMABAD: The Senate Standing Committee on Finance has expressed serious concerns over the proposed tax measures in the budget for the next fiscal year, which what it says will fuel inflation in the country.
These remarks were made by the committee chairman Senator Saleem Mandviwalla during the committee meeting on Saturday that was critical of imposing taxes on basic food items including packed and baby milk and rejected the proposed tax on milk, stationary items as well as sales tax increase on computers.
Mandviwalla said the committee will make recommendations to the Senate on Monday and noted that as a consequence of the government’s taxes proposed in the budget for the next fiscal year inflation across the board will increase by 10 per cent.
The committee rejected the proposal to impose 18 per cent sales tax on baby milk with members voicing concerns that how such a measure could be allowed in a country having 40 per cent stunting rate.
Anusha Rehman of the Pakistan Muslim League-Nawaz (PML-N) said that increasing sales tax on milk is cruel and no consultation was held before taking the decision.
Sherry Rehman of Pakistan People’s Party (PPP) also supported her and Senator Farooq H Naek said the government is imposing 10 per cent sales tax on basic food items, potatoes and onions.
GST on infant food, milk in phases
He added that soon there will come a time when the land for graves will also be taxed.
Anusha Rehman also inquired from the FBR officials about the price of open milk and FBR officials had no idea as to what is the exact price of loose milk and replied that they have never purchased raw milk.
She further inquired from them as to what is the rate of chicken and suggested that the FBR officials need to go to the market and buy milk and chicken so that they could know about the prices. If you buy these things, you will develop empathy, said Ms Rehman.
The FBR said that 10 per cent sales tax is proposed to be levied on stationery items and relief on packed milk, baby milk and stationery will reduce tax collection by Rs107 billion; there is a proposal to impose 18 per cent sales tax on milk and baby milk and the government will provide cash assistance to the needy families. There is also a proposal to impose 18 per cent sales tax on vegetables and fruits imported from Afghanistan, said the FBR officials.
They added that the measure has been taken under IMF preconditions as the Fund wants to end all exemptions. They added that Rs40 billion from sales tax on milk and Rs6.5 billion from stationery is estimated.
The committee rejected the proposal to impose 10 per cent sales tax on locally manufactured stationery and did not agree on increase in sales tax from five to 10 per cent on computers. Anusha Rehman inquired that if the government’s hands are so tied due to the IMF, then why it is allowing exception to erstwhile FATA and PATA.
The FBR officials responded that merged districts having three per cent population are getting Rs92 billion facility and added that the FBR opposed the proposal but the cabinet has been extending exemption every year.
However, Zeeshan Khanzada said that their demand is to continue the relief until the industry becomes fully operational and stated that except for the steel industry, the misuse of the facility is insignificant.
He also proposed that sales tax on local supply should be reduced from six per cent to three per cent. The committee supported the suggestions of Khanzada. On the proposal to end sales tax exemption for charitable hospitals, the FBR contended that government hospitals also pay sales tax but charitable hospitals do not pay sales tax. They added that machinery and equipment are imported from abroad by these charitable institutions. Charitable hospital doctors have been charging full laboratory and operation fees, said Farooq H Naek.
The FBR official said that they have to pay refunds on provincial taxes on petroleum products and Rs65 billion to be refunded to oil marketing companies.
The FBR is seeking one per cent tax on overseas property, said Faisal Vawda and suggested that the FBR should reduce it to 0.4 per cent. He said that tax should be reduced on foreign property so that the people can declare property. People will not declare outside property if tax is high, said Saleem Mandviwalla.
The committee approved the proposal to levy 10 per cent sales tax on needles, and poultry feed and 15 per cent sales tax on LPG.
The committee was informed that sales tax on computers is proposed to be increased from five to 10 per cent and the committee does not agree with the proposal. The meeting was informed that all drugs registered under the Drug Act will be taxed from July 1. The committee also expressed serious concerns over the absence of Finance Minister, Minister of State for Finance and the Finance Secretary from the meeting and the Chairman directed the finance minister be conveyed that he should have been in the meeting.
Copyright Business Recorder, 2024
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