ISLAMABAD: The Senate Standing Committee has decided to hold pre-budget meetings with all the relevant stakeholders from next week to take their suggestions for incorporating into the budget for the next fiscal year.

During a meeting of the committee presided over by Senator Saleem Mandviwalla, Senator Sadia Abbasi proposed that the committee should invite all the stakeholders to the meetings with the objective to hear their suggestions and concerns and thereby, recommending the government to incorporate them into the upcoming budget.

The committee endorsed this viewpoint with the decision of holding meetings most probably from next week.

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Chairman Federal Board of Revenue (FBR), while responding to the discussion on the levy of capital value tax (CVT) on local and foreign assets, stated that so far, CVT collection stood at Rs9 billion.

Minister of State for Finance Aisha Ghaus Pasha said that the objective of imposing CVT was to increase the share of direct taxes which would reduce the burden on the common man.

She regretted that the FBR tax-to-GDP ratio is not even in double digits. She said that exemption of taxes has increased government reliance on borrowing which had a negative impact on the economy. We have to increase our tax-to-GDP ratio and claimed that measures taken in the last budget have led to an increase in direct taxes’ share in tax collection to 42 percent compared to indirect taxes.

The issue of public importance raised by Senator Rana Mehmoodul Hassan regarding sugar smuggling was disposed of by the committee due to the absence of the mover and after the committee was informed by the minister said that the government has taken a number of measures to control smuggling.

The committee remarked that the member concerned has not turned up in the last two meetings, therefore, the matter was being disposed of.

The SECP, while briefing the committee on media reports regarding 350 percent increase in the fee, stated that the fee is not increased rather it was restored to the 2007 level. The committee was informed that the policy board has reduced the fees in 2019 which is now being restored to 2007 level to prevent the SECP going into deficit.

The meeting was informed that this is not an increase but a reversion to the 2007 level. The meeting was also informed by the SECP official that the amendments have been made after detailed deliberation with industry stakeholders including MUFAP.

The meeting discussed that the SECP is only charging annual fee from mutual funds, whereas, in other jurisdictions multiple fee including approval of funds, registration of fund, annual fees, and filing fees are also imposed.

The committee while taking a briefing on the crypto-currency debated that may be some momentary speculative gains be associated with crypto-currency trading but there are no substantial national-level economic benefits. The SBP official said that keeping in view the number of frauds reported through crypto-currency including frauds of $2 billion in Turkey by an exchange company.

The SBP in 2018 prohibited its regulated entities from dealing virtual crypto-currency. The committee emphasised that digital financing should be banned and penalties should be imposed. It was also stressed that legislation should be framed and given legal enforcement.

While taking a briefing from the FBR on the capital value tax on local and foreign assets of taxpayers introduced in the Finance Act 2022,the meeting was informed that CVT was levied on foreign assets of resident individuals exceeding Rs100 million in value, and motor vehicles exceeding battery power of 1300 cc/50 kWh. Similarly, the value of assets to be determined in case of foreign assets is the total cost of foreign assets on the last day of the tax year converted into Pakistan rupee at the SBP notified exchange rate as on 30th June 2022.

The meeting was also told that collection of CVT of Rs3,194 million and Rs6,045 million from foreign assets has been made since the operationalising of this law. As a result of a tax policy shift, direct tax collection has for the first time surpassed all individual indirect taxes as direct tax (income tax/CVT) 45 per cent, sales tax 42 per cent, and custom duty 13 per cent.

Senator Dilawar Khan recommended direct tax collection at the district level and said it will give fruitful results. Aisha Ghaus Pasha, State Minister for Finance said that this has been tried earlier but was not workable. The Chairman Committee called for an in-camera meeting to take a briefing on all such regimes and their implementation mechanism.

A briefing was also taken on the delay in implementation of the decision of the Finance Committee by the Ministry of Finance regarding additional PSDP demand for project protection and upgradation of the Pak-China OFC project for the establishment of cross-border connectivity (Dassi-Danyore alignment).

Senator Umer Farooq regretted that new projects are being funded, whereas, projects near to completion are not allocated funds. The committee lamented the mismanagement and mysterious working of the Ministry of IT and the Planning Commission on the allocation of funds and its disbursement. The chairman committee reiterated the release of funds of 608 M rupees in order to close the project. The committee sought a report on the same from the IT Ministry.

The committee also took a detailed briefing on the fraudulent activities and financial mismanagement occurring in the name of Dr Abdul Qadeer Khan trust hospital. The committee observed that it is a private dispute regarding a trust property comprising six other shareholders and the matter is also sub-judice in the courts.

Copyright Business Recorder, 2023