SATURDAY DECEMBER 29: Controversial tax initiatives: Senate body accuses FBR of committing grave violations

ISLAMABAD: The Senate Standing Committee on Finance Friday declared that violation of Article 73 and Article 25 of the Constitution has been committed while introducing Money Bill, ie, Tax Laws (Amendments) Bill 2012 and directed the Federal Board of Revenue to specifically make tax registration scheme part of the Bill.
While reviewing the FBR's Tax Registration Enforcement Initiative 2012 (TREI 2012) and Investment Tax Scheme 2012, Chairman of the Committee Nasreen Jalil said the Tax Laws (Amendment) Bill 2012 cannot be passed in its existing form as blanket powers cannot be granted to the FBR in the garb of national interest. The FBR should present a specific scheme without giving blanket powers to introduce any kind of amnesty or registration schemes. Instead of blanket powers, the FBR should come up with a specific scheme. The FBR should conduct a comparative study of the previous amnesty schemes vis-à-vis new TREI-2012 and Investment Tax Scheme, 2012.
"We have serious reservations on the proposed Tax Laws (Amendments) Bill, 2012. As it is a Money Bill, violation of Article 73 (procedure in respect of Money Bill) of the Constitution has been committed and the Bill has not simultaneously been laid in the National Assembly and Senate. Tax Laws (Amendments) Bill 2012 is a very controversial bill as the FBR has not explained as to how they will proceed against the tax evaders with the help of amnesty schemes. The scope of the amnesty scheme and strategy has not been mentioned anywhere in the bill making it unclear about the implementation of documentation scheme to be introduced by government." The overriding provisions of the Bill have made it more controversial and it is not possible to pass the Bill in its present form. The Bill has proposed to override National Accountability Bureau Ordinance 1999, Federal Investigation Agency Act, 1974, Compliance Ordinance 1984 and other laws, which makes it more controversial.
There is also a violation of Article 25 of the Constitution. Article 25 is related to the equality of citizens under which all citizens are equal before law and are entitled to equal protection of law and there shall be no discrimination on the basis of sex. Nasreen Jalil said that the FBR should explain that why violations of Articles 25 and 73 have been committed while introducing the Tax Laws (Amendments) Bill 2012.
She said that an attempt has been made to bring National Reconciliation Ordinance (NRO) under the name of Tax Laws (Amendments) Bill 2012. The aim of introducing the bill is to whiten the black money earned through illegal means. Poor people are paying their taxes and rich class has been allowed to whiten their black money under the garb of the amnesty scheme.
She said the FBR should also give detailed working of the registration scheme particularly expected revenue from the scheme and number of persons to be brought into the tax net. There was a debate among the committee members whether Tax Laws (Amendments) Bill 2012 is a Money Bill or not. At the outset of the meeting, Saleem Mandviwalla, Minister of State for Finance informed the committee that it is not a Money Bill, but it is an amendment bill. When Chief Inland Revenue Policy Dr Muhammad Iqbal informed the committee about the legal aspects of the bill as per Constitution, the committee endorsed the viewpoint of FBR Chief that it is a Money Bill. The FBR informed the committee that Tax Laws (Amendments) Bill 2012 is a Money Bill. Later, Mandviwalla also confirmed that it was a Money Bill.
Senator Ishaq Dar said that Speaker of National Assembly can only decide whether it is a Money Bill or not. The chairperson of the committee concluded that the committee appreciates the efforts of the FBR for broadening the tax-base and documentation of economy. However, the FBR was equipped with the data for the last two years but no action has been taken for expanding the tax net. The tax department has not tried to enforce the tax laws. The Tax Laws (Amendments) Bill 2012 is very vague as it would be more appropriative to first deal with 200,000 biggest tax evaders keeping in view capacity of the FBR and then go for the remaining potential persons. She said Wealth Tax was abolished in the past...whether the FBR is mulling to restoring it or not?