ISLAMABAD: The Senate Standing Committee on Finance refused to approve a decrease in customs duty rates for around three-dozen raw materials.
The proposal to reduce the customs duty rates was voted against by the Senators belonging to the National Party and PML-N and won with a thin majority of 3-2, reports Express Tribune.
However, this measure cannot stop the government from getting these changes done since the Senate doesn’t have the power to vote on the Finance Bill.
The Senate only has the right to provide recommendations for the Finance Bill, which can be accepted or rejected by the National Assembly.
A few of these raw materials are being made in Pakistan and were previously subjected to maximum tariffs to give cushion to for local industries.
The newly installed Pakistan Tehreek-e-Insaf (PTI) government has recommended reducing tariffs for 34 types of raw material being utilized by export-oriented industries and local market players.
Minister of State for Revenue Hammad Azhar in his policy statement stated the mini-budget was put forth to increase exports to decrease pressure on the external sector and raise revenues to avoid bankruptcy.
The cost of decreasing customs duty rates would be over Rs4 billion, which was not contented by the Federal Board of Revenue (FBR) and Ministry of Commerce in context of raising exports and avoiding bankruptcy.
Senators from the PML-N Musadik Malik and Haroon Akhtar Khan asked about the impact of the recommendation on revenue and on the forecast increase in exports due to these relaxations.
However, the FBR and commerce ministry failed to share its analysis with the senators.
National Tariff Commission member Robina Ather stated they could only provide details of the revenue implications of these proposals.
Earlier, Ms Ather had said the ministry had undertaken a cost-benefit analysis before deciding to lower the customs duty rates.
In response to this, Mr Malik contented the ministry had made a false claim before the Senate over having undertaken cost-benefit analysis before reducing the tariffs on these items.
Moreover, the government failed to provide details and list of 612 tariff lines on which it had levied new regulatory duties in the mini-budget announced last week.
To this, Mr Azhar responded the federal government had the right to levy duties without taking the approval of parliament.
The standing committee proposed a decrease in income tax rate for salaried persons from 25 percent to 20 percent and 29 to 25 percent for the business community.
The previous PML-N government had approved a major decrease in income tax rates merely two months before the elections, providing a relief of Rs90 billion to the business and salaried class.
In its mini-budget announcement last week, the government reversed those measures and increased income tax rates for people earning more than Rs2.5 million yearly from 15 to 25 percent to recover Rs26 billion out of the Rs90 billion estimated loss.
However, the proposal to decrease income tax rates was opposed by FBR’s Inland Revenue Policy member stating it would reduce the additional tax collection estimation to half.
