Five zero-rated sectors: Body to probe reasons for charging surcharges, taxes

National Assembly standing Committee on Commerce on Tuesday constituted a three-member sub-committee to probe the reasons for charging surcharges, taxes and positive fuel price adjustment (FPA) from five zero rated sectors.

On January 13, 2020, Power Division, through a letter to the Chief Executive Officer, PITC, Wapda House Lahore directed that surcharges, taxes and fuel price adjustment from the zero rating sector from January 1, 2019 be charged. The committee comprising Yaqub Shaikh, Shaista Pervaiz Malik and Shiza Fatima Khawaja will summon the officials of Power Division, Petroleum Division and Finance to clarify the government's position on the decision to withdraw incentives given to the five export oriented sectors.

Presided over by Syed Naveed Qamar, the committee was informed by Secretary Commerce, Sardar Ahmed Nawaz Sukhera that the textile sector lost its cases in Supreme Court and High Courts, after which the Power Division decided to start charging surcharges, taxes and positive fuel price adjustment.

Secretary Commerce informed the committee that the draft cotton policy is almost finalized. The committee will be taken on board prior to submitting it for final approval.

He said that to better look after the textile sector, which is very important, Textile Division has been merged with Commerce Division.

He said the Commerce Ministry has cleared refunds of textile sector as of October 2019 which were over Rs 17 billion unpaid since 2009 verified by the State Bank of Pakistan.

"Textile sector is being given 5 per cent refund under long term financial facility," he said, adding that refunds of non-textile sectors are also being released very soon. According to him, during this period FBR released refunds of Rs 30 billion which implies that overall Rs 50 billion has been injected into the textile sector during the last 20-22 days. Secretary Commerce said that refunds up to December 2019 will be released very soon.

"We were very much conscious of the fact that refunds are to be paid to the exporters as the textile sector was facing a liquidity crunch," he added. Talking about incentives available to the export oriented sectors, Secretary Commerce said that RLNG is available to the five sectors at $6.5 per MMBTU, system gas at Rs 786 per MMBTU, electricity at 7.5 cents per unit. Mark-up on export financing is at 3 per cent and duty on export of machinery is duty free.

He said basic electricity tariff for textile sector is 7.5 cents per unit as committed by the government whereas tariff for other sectors is Rs 19 per unit.

Secretary Commerce informed the committee that Pakistan's exports have posted a growth of around 4 per cent during the first six months of the current fiscal year despite the fact that exports to China, India and Bangladesh have declined during this period.

The Committee considered the following Bills and recommended their passage by the House: (i) National Insurance Corporation (Reorganization) (Amendment) Bill, 2019"; (ii) "The Anti-Dumping Duties (Amendment) Bill, 2019"; (iii) "The Trade Organizations (Amendment) Bill, 2019"; and (iv) The Export Development Fund (Amendment) Bill, 2019."

The Committee deferred "the Safeguard Measures (Amendment) Bill, 2019"

And approved four bills moved by Syed Fakhar Imam in the absence of Sana ullah Mastikhel with a majority, after some members of the committee left the meeting prior to voting while PML-N Tahira Aurangzeb and Shaista Pervaiz supported the bills.

Syed Fakhar Imam recommended in a bill that all proposed legislations should be posted on the websites for a specific time to seek comments from the public to ensure transparency and accountability. Some of the members may oppose some of the clauses of the bill, he said, adding that the main responsibility of Parliament is to pass the Finance Bill but every year 25 per cent of the budget is passed through a supplementary budget which is contrary to international practice.

Secretary Commerce, Ahmed Nawaz Sukhera proposed that the Cabinet Division, Law Division and Establishment Division should be invited to discuss the bills as they can offer constructive opinions.

The representative of FBR stated that the Authority issues notifications every day and it would not be possible to present the SROs before the committee for a briefing. Rana Tanvir who opposed Syed Fakhar Iman's bill argued that there was a need to reconsider the bill. Some PML (N) and PTI MNAs supported him. However, at the time of voting almost all the opposing members left the meeting.

Syed Fakhar Imam said that they want to strengthen parliament like never before and clarified that the purpose of bill is not to intrude on the powers of the executive.

The meeting was attended by Muhammad Yaqoob Sheikh, Raza Nasrullah Ghumman, Khurram Shahzad, Sajida Begum, Usman Ibrahim, Rana Tanveer Hussain, Tahira Aurangzeb, Shaista Pervaiz, Shaza Fatima Khawaja, Syed Javed Ali Shah Jillani and Syed Fakhar Imam, MNA's beside Senior Officers from the Ministry of Commerce and Federal Board of Revenue.