ISLAMABAD: The federal government Wednesday got the Finance Bill 2022 passed with ease to give legal effect to the federal budget for fiscal year 2022-23, rejecting voices against the imposition of Rs50 petroleum levy and IMF programme.
The House adopted an amendment moved by the treasury to amend the Petroleum Levy Ordinance, 1961 for gradual imposition of the levy on all petroleum products. The amendment will allow the government to impose Rs50 per unit levy on petroleum products, including high speed diesel oil, motor gasoline, superior gasoline, light diesel oil, high octane blending component and E-10 gasoline. On one metric tonne liquefied petroleum gas (LPG), produced or extracted in Pakistan, there would be levy rate of Rs30,000.
The finance minister, while speaking on the floor of the lower house, said that the petroleum levy was nil currently, adding the government would not impose Rs50 in one go, rather it would be imposed in phases.
The government agreed to the Fund’s demand of imposing a 1 per cent poverty tax on companies earning Rs150 million, 2pc on those generating an income of Rs200 million, 3pc on those earning more than 250 million and 4pc on ones generating an income of Rs300 million or more than that.
The amendments also include the imposition of 10pc super tax imposed on 13 big industries including cement, steel, banking, airlines, textile, automobile assembling, sugar mills, beverages, oil and gas, fertiliser, cigarettes, chemicals and LNG terminals. The government claimed imposing 10pc super tax on 13 selected biggest manufacturing sectors for one time, but the Finance Bill 2022-23 stated that a super tax should be imposed for tax year 2022-23 and onwards. There is no time limit inserted into the amended Finance Bill 2022.
The House, as per an amendment to the finance bill, also okayed an amendment regarding new slab for imposition of taxes on the salaried class. For salaried class, where taxable ceiling does not exceed Rs600,000 annually, there will be zero tax. Where the taxable income would be between Rs600,000 and Rs1,200,000, income tax rate will be 2.5pc. For Rs1,200,000 and Rs2,400,000 salary earners, the FBR will collect Rs15,000 plus 12.5pc of the amount exceeding Rs1,200,000. Where taxable income exceeds Rs2,400,000 but does not exceed Rs3,600,000, the FBR will charge Rs165,000 plus 20pc of the amount exceeding Rs2,400,000. Where taxable income exceeds Rs3,600,000 but does not exceed Rs600,000,000, the FBR will charge Rs405,000 plus 25pc of the amount exceeding Rs3,600,000. Where taxable income exceeds Rs600,000,000 but does not exceed Rs12,000,000, the FBR will charge tax amount of Rs1,005,000 plus 32.5pc of the amount exceeding Rs6,000,000. Where taxable income exceeds Rs12,000,000, the FBR will charge tax amount of Rs2,955,000 plus 35pc of the amount exceeding Rs12,000,000.
The government also imposed Rs100 to Rs16,000 levy on import of mobile-phone sets. There will be Rs100 on mobile-phone valuing $30, Rs200 levy on phone set of $30-100, Rs4,500 levy on $500 set, Rs8,000 on $700 set and Rs16,000 levy on mobile-phone set above $700. Other amendments include collecting sales tax from traders through electricity bills and 5pc sales tax on services of software and IT consultants, reduction in sales tax on hotels and restaurants from 16pc to 15pc.
The government jacked up the fixed tax rate for retailers by 100pc, who will not be appearing into active taxpayers list (ATL). The FBR will charge Rs3,000 fixed tax through electricity bills where the amount does not exceed Rs30,000 for those registered with the FBR. For non-ATL taxpayers, their tax rate would be standing at Rs6,000. Where the bill amount remains between Rs30,000 and Rs50,000, the FBR will charge Rs5,000 from tax registered retailers, but in case of non-registered, the rate would be doubled at Rs10,000.
For the amount between Rs50,000 and Rs100,000, the FBR would charge fixed rate of Rs10,000 from registered persons. If the retailers will not exist on ATL, the fixed tax rate would be doubled and fixed tax rate of Rs20,000 would be charged.
All amendments moved by the minister of state for finance and treasury lawmakers were adopted by the House while the amendments of opposition members, including Javeria Zafar Aheer (PTI), Wajiha Qamar (PTI), Ramesh Kumar (PTI), Saira Bano (GDA), Maulana Abul Akbar Chitrali (MMA) and Independent MNA Mohsin Dawar were rejected by the House after voting.
Maulana Abdul Akbar of Jamaat-e-Islami (JI) strongly criticised the government for imposing Rs50 per unit petroleum levy, saying it would result in further increase in inflation. He also came down hard on the government for taking no steps for doing away with Riba (interest) in the light of the Federal Shariat Court verdict. He also called upon the government not to impose tax on the IT industry.
Dr. Fahmida Mirza said the imposition of super tax would result in closure of industries which would render lakhs of workers jobless. She regretted that the government was imposing more taxes on sectors which were already paying taxes. She asked the government why it resumed negotiations with the IMF after it had stopped talks with Pakistan.
Ahmad Hussain Daher, strongly protesting imposition of petroleum levy, asked the government to defer the IMF programme for two to three years. He also suggested that like raise in salaries, the government should also increase pensions by 15pc.
The total volume of the federal budget for fiscal year 2022-23 is Rs9.5 trillion with allocation of Rs2,158 billion under the Public Sector Development Programme (PSDP), which is one per cent up from Rs2,135 billion last year. According to the Rule 187 of the Rules of Procedure and Conduct of Business in National Assembly 2007, not less than four days should be allotted for general discussion on the budget. However, the National Assembly smoothly continued debate on the Finance Bill, 2022 for 10 days.
During the debate on the Finance Bill, Aisha Ghous Pasha, the minister of state for finance, insisted that there had been no pressure from the IMF to integrate amendments in the federal budget 2022-23 bill, saying that changes had been made in larger interest of the country. She said the amendments were made in such a way that the common man should not be affected, adding that the government had reduced taxes on people having smaller incomes while increased tax on the higher income people.
She said the previous government agreed on some amendments with the IMF that were being followed due to the commitment of the state with the international monetary institution. However, by managing certain amendments to the Finance Bill 2022, which was introduced in the National Assembly on June 10, the government also moved closer to meeting the IMF conditions and striking a staff-level agreement. But it might take some more time because the Fund had not shared nine tables with Pakistani authorities so far. It indicated that incomplete Memorandum of Economic and Financial Policies (MEFP) has been shared with the authorities.
The establishment of a task force for anti-corruption strategy has been placed either as prior action (PA) or structural benchmark (SB), but officials say that it was not the mandate of the IMF for placing any condition. The PA under the IMF programme included passing the budget as envisaged by the IMF, raising electricity tariffs, imposing a Rs10 litre levy, and further tightening of monetary policy as well as the possibility of establishing a task force on anti-corruption strategy.
The government also slapped capital value tax on owners of cars exceeding 1300cc and foreign assets having value of more than Rs100 million.
For striking a staff-level agreement with the IMF, the government introduced major changes in the budget 2022-23 and the size of total federal budget escalated to Rs9.6 trillion, whereby the FBR’s tax collection stood at Rs7,470 billion, petroleum levy of Rs855 billion and revised expenditure heads for keeping the budget deficit at 4.9pc of GDP and posting a primary surplus of Rs152 billion for budget 2022-23. Sources said the IMF may provide $1 billion after approval of the 7th and 8th tranches as the size of the programme has not been increased so far as requested by Islamabad.
The pension amount has been jacked up to Rs609 billion, revenue surplus generated by the provinces reduced to Rs750 billion and running of the government revised upward in the budgetary estimates for the next fiscal year.
Top official sources confirmed to The News on Wednesday that the deregulation of oil prices was not made part of Prior Action (PA) of the IMF programme, rather it was made a structural benchmark. However, Federal Minister for Finance Miftah Ismail Wednesday presented the amended Finance Bill 2022-23 and the National Assembly passed amendments to chairman Senate and speaker National Assembly for Salaries, Allowances and Privileges Act 1975, "whereby the Finance Committee of the Senate or National Assembly as the case may be, may grant to the Chairman or the Speaker including a person who has held such office after election thereto such additional privileges as it may deem fit from time to time."
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