The Senate Standing Committee on Finance Revenue and Economic Affairs on Wednesday termed the Finance Supplementary Bill 2021 to bring a tsunami of inflation in the country. “The revenue of the Government is increased on the cost of oppressing the common man” stated Senator Farooq Hamid Naek. The committee unanimously believed that the money bill will bring a negative impact on the common man with the poor as the prime sufferer.
The Committee gave directives to write a letter to the Drug Regulatory Authority of Pakistan (DRAP) to appear before the committee and brief on the definition of drug and delineate their categories under the Drug Act, also to define whether or not "vitamins" fall under the definition of drugs. The committee also sought details by the (DRAP) on spurious drugs and unregistered pharmaceutical companies in Pakistan.
The Committee unanimously apprehended that the changes in the GST regime in particular with the Pharmaceutical Company will raise the prices of the medicines. The committee after receiving a detailed briefing from the Chairman Federal Board of Revenue (FBR) on the salient features of the tax reforms decided to adjourn the meeting till tomorrow January 06-2022 to give a clause wise reading to the Finance (supplementary) Bill, 2021 and give recommendation under article 73 of the constitution.
Islamabad (05-01-2022): Meeting of the Senate Standing committee on Finance Revenue and Economic Affairs met under the Chairmanship of Senator Muhammad Talha Mahmood to consider the Finance (Supplementary_ Bill, 2021 laid in the House on 4 January, here at the Parliament House on Wednesday. At the onset of the meeting the Committee raised objection on the unconstitutional order of the House to finalize the consideration of the Bill within 2 days whereas 14 working days are required to deliberate on the Bill as per the constitution. Therefore it was decided by the committee to commence clause –wise discussion on the Bill after the committee is briefed by the FBR on the tax reform policy. The committee also decided to give due deliberation on the matter and forward the same request to the Chairman Senate to spare enough time to deliberate upon the matter. The Chairman FBR while terming the tax reforms the most significant tax policy reforms, in the history of the country focusing on removal of distortions and not on imposing new taxes gave a comprehensive briefing on the background, salient features of IMF-FBR Engagement, changes in the GST Regime, changes in income Tax, Changes in Federal Excise Act, changes in Customs Act and Targeted Subsidiary items. The chairman FBR termed the reforms on the basis of “No tax Exemptions - only targeted subsidiary”. The tax system is mechanized to increase the revenue with the underlying principle of “Collect and Spend “ The FBR apprised the committee that the IMF demanded 17% GST across-the- board and withdrawal of exemptions at Rs 700 billion; conceded - Rs. 343 Billion. The chairman FBR informed the committee that the new reform has deviated from the rule of the thumb with the Value added tax i-e., 17% GST across –the board without any exemptions and defended reduced rates of GST on Agriculture Tractors, fertilizers, Inputs of fertilizers sector, Pesticides, Used Clothing 7 footwear and Cinematographic equipment. The FBR also defended imposition of GST on food items e.g. wheat, wheat flour, wheat bran , rice vegetables , fruit, pulses , fresh Poultry, fish and meat (consumed by common man) milk and fat filled milk, sugar cane and beet sugar (raw materials ) educations books and stationary items etc. The FBR briefed the committee on the exemptions that the Government intends to give to the various sectors which includes 71 Billion on the goods and 2 billion on the common man usage products, 160 Billion on pharmaceutical products and 112 Billion on machinery with GST refundable/adjustable.
The committee was apprised by the FBR of the present regime of the Pharmaceutical sector. The FBR informed the committee that out of 800 manufacturers only 453 are registered, Rs 35 Billion input tax passed to patients (Packing, utilities etc) Rs 530 Billion undocumented supply chain, 700 Billion turnover and exempt input and output documentation issues. The FBR informed the committee that the sales tax on Pharmaceutical sector will be imposed at the import stage, with zero –rating of sales of medicines. The new reforms will also give expeditious payment of refunds (within 1 week) and reduction in prices. The chairman committee stated that the sales tax refund to be restored within 72 hours as claimed by the FBR should be diligently monitored and anyone anywhere in the country victimized to the claimed refund can charge its claim in the senate committee for redressal. The committee apprehended that the new regime will raise the prices of the medicines than to reduce it. “The common man is hooked winked by the mechanisms of tax devised” Stated Senator Farooq Hamid Naek while lamenting that the reforms in the money bill are at the cost of the general public. Senator Musadik Masood Malik while analyzing the tax reforms said that it is based on the consumption of the consumer and not the income which is a dilemma for the middle class society, whereas the chairman FBR termed the new reforms as the “Zero Impact Budget”.
While briefing on the Revenue Measures in the new tax reform policy the committee was appraised that advance tax on cellular services, advance tax on vehicle registration to discourage on—money (Premium) advance tax on foreign TV serials, Dramas & Adverts are also imposed. The committee was apprised that the targeted subsidiary items will benefit the common man by 19 Billion and import by 14 Billion.
The meeting was attended by Farooq Hamid Naek, Saleem Mandviwalla, Sherry Rehman, Mohsin Aziz, Zeeshan Khanzada, Dilawar Khan, Anwar ul Haq Kakar, Saadia Abbasi and Faisal Saleem Rehman and Senator Musadik Masood Malik. Officials from the Ministry of Finance, Federal Board of Revenue Ministry of Commerce, State Bank of Pakistan and Ministry of Law and Justice were also in attendance.