Finance Minister Ishaq Dar on Tuesday came under strong criticism for his failure to revive the wealth tax and massive increase in Gas Infrastructure Development Cess (GIDC) and Petroleum Levy, amid fears that these measures would further fuel inflationary pressure in the country.
Senator Sughra Iman said that Finance Minister as opposition member had always remained a strong advocate of reviving wealth tax, but appears to be in no mood to impose wealth tax after coming into power, "which can cover all kinds of moveable and immovable properties." The Committee proposed that petroleum levy should either be reduced or abolished and asked the government to withdraw proposed massive increase in GIDC to mobilise Rs 145 billion non tax revenue in the next fiscal year. The Committee decided to take up the matter of a phenomenal increase in GIDC with Finance Minister as increase would spike more inflation. Senator Ilyas Bilour said that GIDC is unrealistic and is going to deprive smaller provinces. Bilour lamented that Finance Ministry has increased the GIDC without the consent of Parliament.
"The committee recommended Senator Ilyas Bilour's proposal that GIDC is an Act of Parliament and should not be part of Finance Bill. Initially, it was charged at the rate of Rs 13/MBTU but the present government had illegally increased it to Rs 100/ per MBTU. Now through Finance Bill, the government has proposed to increase it from Rs 450/MBTU to Rs 996/MBTU (more than 100%). These measures are negating Article 158 of 1973 Constitution of Pakistan. So it is proposed that these measures must be withdrawn. The Finance Secretary said that the government collects Rs 8 as petroleum levy each litre of diesel and Rs 10 on each litre of petrol which cannot be reduced as it is used as a tool to control petroleum prices. He said that government has not increased the price of petroleum products during the last few months and suffered a monthly loss of Rs 1.8 billion on account of PL.
Senators said that because of petroleum levy, prices of petroleum products have increased. This in turn exacerbates inflationary pressures in the country. Some members were of the view that the government collects Rs 25-30 on each litre of petroleum products through petroleum levy.
Secretary Finance preferred not to state anything on record about the price quantum of power tariff increase after a massive slash of Rs 115 billion in power subsidy. He also remained tight-lipped to a query of Saleem Mandviwalla, former finance minister, about the government plan to settle Rs 300 billion circular debt because no allocation was made in the budget for this purpose. Former Finance Minister said that he would like to know whether the government is going to adopt the process that it had adopted to retire Rs 480 billion circular debt; or it intends to take some other course, such as increase in electricity tariff. Secretary Finance remained tight-lipped and preferred not to respond to his question.
The Senate Standing Committee also recommended that all the incomes including agriculture tax should be brought into tax next, however, a ruling party's senator, Nuzhat Sadiq, opposed that federal government should be authorised to tax agriculture income.
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