Islamabad : (Rana Ali Zohaib, Agencies, Web Desk) Federal Finance Minister Shaukat Tarin has tabled the the supplementary finance bill 2021 (mini-budget) and the State Bank of Pakistan Autonomy bill in the National Assembly amid protest from the opposition members who chanted slogans.
The government also passed several ordinances through resolutions enraging the opposition. The session has been postponed until Friday when the two bills will likely be put to debate and a vote.
Earlier, the federal cabinet approved the supplementary finance bill, paving the way for increase in the General Sales Tax (GST) on 150 items including smartphones, computers, jewellery, and vehicles.
The NA session was scheduled to begin at 4pm Thursday but started a little late. The opposition parties earlier vowed to block both bills while Finance Minister Shaukat Tarin faced questions at the parliamentary party meeting of the ruling coalition.
Economists, meanwhile, have acknowledged that the mini-budget would not increase medicine prices.
What becomes expensive
A copy of the supplementary finance bill reveals that the mini-budget will increase or introduce taxes on smartphones, personal computers, and vehicles.
However, tax on textbooks and stationery items would not be increased.
The bill proposes to impose a 17% additional tax on imported mobile phones priced at $200 or above, SAMAA TV’s Shakeel Ahmed reported.
Jewellery made of gold, silver or other precious metals or stones will be taxed at the rate of 17%, he said.
Under the bill, imported personal computers, laptops, and notes books, if imported as completely built units, would be taxed at a rate of 5%.
The document, however, says that tax would not be increased on locally manufactured computers, laptops.
Similarly, the tax on the prices of Electric Vehicles parts would not be increased, though electric vehicles (EVs) up to 1800cc would be taxed at the rate of 12.5%. The tax rate for electric tractors, rickshaws, three wheelers, and electric motorcycles would stay at 1%.
Hybrid electric vehicles up to 1800cc will also be taxed at a rate of 12.5%.
Cars become expensive
Owning a combustion engine car has also become expensive. The federal excise duty on vehicles up to 1000 cc has been increased to Rs100,000, on vehicles up to 2000cc has been increased to Rs200,000. The duty on vehicles above 2000cc has been increased to Rs400,000.
The government has also doubled the vehicle registration fee and advance tax.
The tax on textbooks and stationery items remains unchanged. Earlier, there were reports that the government planned to jack up tax on textbooks and stationery items.
Tax on services on Islamabad
The government has proposed to impose taxes on several services in the federal capital, Islamabad.
People providing services in the sectors of information technology (IT), automobiles, health club, gyms or fitness centers, personal care, marriage halls, travel, auto workshops, and industrial machinery workshops will pay 5% GST if they are working in Islamabad.
Property dealers, realtors, and construction sector won’t be taxed, according to the draft bill.
Foreign TV dramas
The mini-budget levies advanced tax on foreign TV serials and dramas. A single episode of a foreign TV serial would be taxed Rs1 million and a one episode play would be taxed Rs3 million.
TV advertisement featuring foreign actors will also be taxed heavily. A 30 second ad would be taxed Rs15 million at the rate of Rs500,000 proposed in the mini-budget.
Imported food items
The government has abolished Rs215 tax exemptions on imported food items. A host of products ranging from frozen meat to vegetables and cereals to cheese will now be taxed.
There is a proposal to withdraw the rebate on imported machinery for the power sector. Under the bill, Rs9 billion tax exemptions on zero-rated items have been abolished.
Uproar and scuffle in the National Assembly
As Tarin presented the bills, opposition members chanted slogans and gathered before the chair.
The protest intensified when the government presented several ordinances for the approval. The opposition members claimed that the ordinances had already expired or lapses after completing 120 period and they could not be presented for the approval under the Constitution.
The treasury benches resorted to a tit-for-tat response.
Pakistan Peoples Party’s Shagufta Jamani and PTI’s Ghazal Saifi came to blows on the floor of the house.
In a passionate speech, PMLN’s Khawaja said that the government was “selling” the country’s economic sovereignty. He claimed the people were being muzzled.
He claimed the government was withdrawing tax exemptions on several essential items including baby milk.
Speaker Asad Qaiser interrupted him saying that he would allow debate on the supplementary finance bill.
Planning Minister Asad Qaiser responded to Khawaja Asif and blasted the opposition for talking about the national security after taking up residence in the Gulf countries on work permits which declared them, what he said, “dhobi and nai” (washermen and barbers).They invited Indian Prime Minister Narendra Modi to their home, he said.
Umar said that international bodies have praised Pakistan’s performance to contain Covid-19.
Talking about the “expired” ordinances, he said that only the speaker could tell if the ordinances had expired or not, but “I want to ask if we must hear the speeches from these expired politicians.”
PPP member and former Prime Minister Raja Pervez Ashraf said that the way ordinances were being approved through simple resolutions had dented the reputation of Parliament.
He also claimed that Asad Umar had failed to answer questions posed by Khawaja Asif. He urged the speaker to reject all the proceedings held on Thursday which, he claimed, had bulldozed the bills through the house.
The ordinance passed during the Thursday’s session included:
The Federal Government Properties Management Authority Ordinance, 2021
The Elections (Third Amendment) Ordinance, 2021
The Public Properties (Removal of Encroachment) Ordinance, 2021
The Pakistan Council of Research in Water Resources (Amendment) Ordinance, 2021
The Pakistan Food Security Flow and Information Ordinance, 2021
The Tax Laws (Third Amendment) Ordinance, 2021.
Cabinet approves supplementary finance bill
Prime Minister Imran Khan chaired the cabinet meeting which approved the supplementary finance bill. Some of the coalition partners had earlier expressed reservations over the bill.
Finance Minister Shaukat Tarin briefed the cabinet members about the supplementary finance bill. He told them that the common man will shoulder only Rs2 billion burden of the mini-budget, Interior Minister Shaikh Rasheed Ahmed told journalists later.
Immediately after the cabinet meeting, Prime Minister chaired the parliamentary party meeting of his Pakistan Tehreek-e-Insaf (PTI) and its coalition partners, SAMAA TV’s Abbas Shabir reported.
The Federal cabinet approved the supplementary finance bill.
Tarin faces questions
Tarin briefed the members of Parliament on the supplementary finance bill. He faced several questions from MPs belonging to the PTI and its allies on the mini-budget and the State Bank of Pakistan Autonomy Bill.
The finance minister rejected the notion that Pakistan was being handed over to the International Monetary Fund (IMF).
Foreign Minister Shah Mahmood Qureshi also answered some of the questions to address the concerns voiced by the government MPs.
Prime Minister Imran Khan reportedly told the meeting that his government would never allow any thing detrimental to the national security.
Qureshi later told journalists that government allies “had no reservations. They had questions and the finance minister answered them.”
On the SBP autonomy bill, he said that it’s a law and whenever the Parliament wanted, it could change it with a majority.
The mini-budget abolishes several tax exemptions, leading to an increase in the prices of 150 items.
Rs1300 billion tax exemptions have been extended to various sectors for many years including Rs578 billion in sales tax exemptions, and the mini-budget will withdraw tax exemptions of Rs350 billion worth, sales tax would be imposed on the 150 items in question, he said.
Imported smart phones could be taxed at the rate of 17% while the tax rate on imported vehicles could be increased to 17% from the current 12.5%.
The government plans to withdraw the incentive on electric vehicles (EVs) which will be taxed at the rate of 17%, Shakeel Ahmed revealed.
The sales tax on electric vehicles is currently set at 5% as a part of the government policy to promote clean energy.
Imported infant formula (baby milk), imported food items including biscuits and cheese, computers, and cosmetics will also become expensive.
Under the original mini-budget a withholding tax of 10% was also proposed on IT related products. This, coupled with the sales tax, could have led to a sharp increase in the prices of computers. However, Federal IT Minister Aminul Haq on Wednesday said that he has opposed taxes on computers.
The government also plans to increase income tax on phone calls to 15% from the current 10%.
Economist Abid Sulehri says the mini-budget may also hurt the middle class but the rich would be paying more.
“When exemptions of GST will be given back, some things will become expensive. The impact on the common man depends on your definition of common man. The cell phone had brackets. The expensive smart phones will become even more expensive with a higher duty. We have seen in the last six months that the the completely built units and the luxury cars have become more expensive. But this does not impact the basics for the common person,” he said.
“The upper class will pay more. If they want a Rs2 crore car, they will pay maybe Rs10 lakhs more and can.”
Sulehri also said that the mini-budget would not affect the prices of medicine.
Former FBR Chairman Shabbar Zaidi also said that the mini-budget would not increase medicine prices.
He said the government has not increased tax on essential items and Shaukat Tarin was right to say that the mini-budget would not directly affect inflation.
The government has introduced the supplementary finance bill and the SBP Autonomy bill to meet certain conditions set by the IMF. It needs to pass the bills before January 12 when the IMF Executive Board will give the final node to a $1 billion loan tranche for Pakistan.
Under the deal with the IMF, the government has revised its tax revenue target from Rs5829 billion to Rs6100 billion.