Senate Panel Urges FBR to Respect Provinces' Financial Autonomy in Finance Bill 2025 Review
Havin' a Ruckus Over Finance Bill 25-26 in Pakistan
The Senate Standing Committee on Finance and Revenue, in a fourth consecutive meeting held in the Parliament House, had a stern warning for the Federal Board of Revenue (FBR): keep your mitts off provinces when drafting the Finance Bill 25-26.
The meeting, chaired by Senator Saleem Mandviwalla, was all about reviewing the Finance Bill, which includes the Annual Budget Statement presented on June 10 under Article 73 of the Constitution.
Mandviwalla declared that the FBR shouldn't be meddling in provincial territories by including services in various provisions of the Finance Bill 25-26. He added that Sindh Revenue Board (SRB) had lodged several observations on the Finance Bill 25-26, indicating that the FBR had overstepped its bounds regarding services.[5]
FBR Member Inland Revenue (Policy) Dr. Najeeb Ahmad informed the committee that the gradual withdrawal of sales tax exemption from erstwhile tribal areas in a phase-wise manner has been agreed with the International Monetary Fund (IMF).[3]
Expandin' Sales Tax to Services Galore
Sindh, you bet, has announced its plans to expand taxes to include major services. The tax exemption policy for FATA/ PATA, which is set to start phasing out with a 10% GST in the next fiscal year and eventually increase to 18%, is a part of this two-stage process.[1]
During the discussion, Senator Shibli Faraz voiced his doubts: "What exactly are the benefits tax exemptions have brought to these regions? Where's the investment and employment?"[5]
Ain't Transparent Fiscal Reforms Just the Bee's Knees?
The meeting was attended by several bigwigs, including Finance Minister Muhammad Aurangzeb, Senators Farooq Hamid Naek, and others. Opening the session, Chairman Mandviwalla commended the attendance of the federal minister for finance, stating, "The minister's consistent participation and valuable input during these sessions reflect the government's commitment to transparent fiscal reforms."[5]
Senator Anusha Rehman raised concerns about the regulation of e-commerce platforms, emphasizing that unemployed individuals (youth and women) should not be unduly burdened. The committee also touched upon the Public Finance Management Act, 2019 and addressed the alarming disclosure of billions held and invested by public sector entities that are not transferred to the central treasury.[2]
Abolishin' the Federal Excise Duty on the First Purchase of Property
The committee approved the abolition of federal excise duty (FED) on the first purchase of immovable property. The next session will reconvene with the finance minister scheduled to provide more clarity on tax exemption policies and institutional financial practices.[5]
Notes:
[1] - Enrichment data: There are concerns that this could impact digital businesses and industries.
[2] - Enrichment data: The regulations for e-commerce platforms could adversely affect unemployed individuals, particularly youth and women.
[3] - Enrichment data: Critics argue that the bill's tax policies could stifle businesses, especially in the digital sector, without effectively addressing economic disparities. Some worry that these measures might lead to a standstill in certain industries.
[4] - Enrichment data: Opposition to the bill has come from various quarters, including lawmakers and business leaders.
[5] - Enrichment data: The FBR has faced criticism for venturing into services, risking constitutional violations and affecting fundamental rights like property acquisition and business freedom.
- The FBR's expansion of sales tax to services, as announced in the Finance Bill 25-26, has sparked concerns among stakeholders, with some questioning the benefits for these regions in terms of investments and employment.
- The ongoing discussions in the Senate Standing Committee on Finance and Revenue have highlighted disputes about the regulation of e-commerce platforms, with concerns raised that unemployed individuals, particularly youth and women, might be unduly burdened by such regulations.
- The Finance Bill 25-26, which includes the gradual withdrawal of sales tax exemption from erstwhile tribal areas, has drawn criticism from various quarters, with opponents arguing that these tax policies could stifle businesses, potentially leading to a standstill in certain industries, and even impact digital businesses and industries.
- In the midst of general-news headlines about the Finance Bill 25-26, the committee has approved the abolition of federal excise duty (FED) on the first purchase of immovable property, aiming to promote capital investments in the real estate sector.
