In a moral defeat for the government, a Senate panel on Thursday rejected all clauses of the Finance Bill 2019 that affect the common man and also recommended that the exchange rate should be fixed at Rs151 to a dollar and the interest rate be brought down to single digit.
The Senate Standing Committee on Finance rejected most of the clauses of the Finance Bill 2019 with a majority vote amid boycott by treasury members. The Senate, which has a tradition of adopting the report of the standing committee, is also expected to reject the Finance Bill.
It would be a rare case if the Senate committee and the upper house of parliament rejected the entire Finance Bill. But the Senate’s recommendations are not binding on the National Assembly in case of the Finance Bill.
However, the treasury members proposed that the government should fix the exchange rate at Rs151 to a dollar by floating dollars in the market and slash the interest rate from 12.25% to 9%. Both these proposals are against the agreement signed with the International Monetary Fund (IMF).
The development came amid Prime Minister Imran Khan’s refusal to provide concessions to industrialists on the issue of 17% sales tax at the manufacturing stage and the requirement to get Computerised National Identity Card (CNIC) number of unregistered buyers by the manufacturers.
PM Imran rejected both the demands during a meeting with the industrialists held on Thursday.
“The increase in taxes whereby these taxes burden the common man and increase the prices of goods used by the common man is rejected in totality,” said Standing Committee Chairman Senator Farooq H Naek while reading out the committee’s decision.
JUI-F, PML-N and PPP members supported the rejection of the Finance Bill and two members of the PTI walked out against the committee’s decision.
“The country has always had deficit budgets and people should not be burdened due to mistakes committed by the PTI government in the past one year,” remarked Senator Ayesha Raza.
She said the Federal Board of Revenue (FBR) should have planned to collect Rs5.55 trillion in taxes next year by capturing the true potential but instead it increased the burden on existing taxpayers.
The government has hiked tax rates on the salaried class, corporate sector, interest income, dividends, business income, imposed sales tax on every thinkable commodity, enhanced additional customs duty rates and imposed federal excise duty on cars, cement, steel, cooking oil, etc.
This is expected to stoke inflation in the next fiscal year, estimated at 13%, and would slow down economic growth to 2.4%, which is a perfect stagflation situation that causes unemployment and poverty in the country.
The standing committee also recommended the government to stop publishing the Taxpayers’ Directory and instead publish names of those who did not pay any tax. It recommended that banks must maintain secrecy and should not share details of accountholders with the FBR.
The standing committee backed the government’s proposal to increase the tax burden on banks and the rich.