Budget 2021-22: Senate committee to increase government employee pay by 10% to 20%

Karachi: In the budget 2021-22, the Senate Standing Committee on Finance unanimously suggested that government employees’ pay be increased from 10% to 20%.

Senator Taleh, the Chairman of the Senate Standing Committee on Finance and Revenues, convened a meeting on Monday at Parliament House to finalize budget recommendations for the years 2021-22.

Senator Sherry Rehman proposed eliminating the Rs 20 per liter petroleum fee and lowering the indirect tax percentage. Senator Taleh Mehmood, Chairman of the Senate Panel, lambasted the FBR for issuing highly unnecessary tax notifications totaling Rs 1,500 billion to taxpayers, claiming that despite a turnover of Rs 50 million, the FBR issued a tax notice totaling Rs 650 million to one taxpayer.

He asked the FBR to provide information on all tax notices issued in the previous six months. He proposed that the policemen who had issued the erroneous tax notice to the businessmen be handcuffed. Mian Anjum Nisar, former President of the Federation of Pakistan Chambers of Commerce and Industries (FPCCI), testified before the Senate panel alongside representatives from various industries, claiming that the cost of running businesses has increased significantly, quoting the cost of electricity per unit in Pakistan at 16 cents, compared to 7 cents in comparable economies, and the mark-up rate stood at 7 percent and it was hovering around 3 percent in China and India.

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He condemned the government’s haste in signing Free Trade Agreements (FTAs), citing an example where, under the first phase of the FTA, Pakistan offered a 35 percent incentive, but in the second phase, the incentive was increased to a 70 percent trade regime.  “There is no systematic cascading formula implemented in the tariff rationalization process,” he added.

Mian Anjum Nisar chastised NAB, saying they were fed up with the bank’s harsh treatment of businesspeople. Senator Kamil Ali Agha stated that a paradigm shift in the audit system was required because the previous system allowed for the blackmailing of taxpayers in order to extort money.

Senator Taleh Mehmood, the Chairman of the Senate Panel, stated that the FBR had sent over 1,500 billion tax notices in the previous six months, and required the FBR to provide information of all sent notices by July 15, 2021, as these issues could not go unchecked.

Senator Saleem Mandviwalla stated that he will provide data of all people who were apprehended by NAB and subsequently forced to enter into a plea bargain in writing. He had visited Lahore and had heard firsthand accounts from victims of NAB abuse.

Before the meeting, Sohail Altaf, a business leader from the Rawalpindi Chamber of Commerce and Industries, spoke out against the FBR’s planned 203-A and B, calling it a “black law.” He also urged that the tax be decreased to 850cc for all vehicles rather than just autos.

The Senate panel unanimously recommended that the prime minister honor the Pakistan Dairy Association’s (PDA) request to reinstate the zero-rating system on milk and other 45 nutrition-based goods, as well as the previous 10 percent sales tax on value-added dairy products.

Flour mills, jewelers, soybean seeds, poultry, and other industry leaders worried that prices will rise as the FBR imposed regular GST at a rate of 17 percent. According to the Pakistan Vanaspati Manufacturers Association (PVMA), 127 out of 137 outlets will close if the government’s taxing measures are not overturned.

According to PSMA President Iskandar Khan, the FBR placed sugar on the third schedule and applied a 17 percent GST to bring sweetener prices down in the market. According to him, the FBR decreased the Regulatory Duty on Ethanol Exports in the budget. The European Union highlighted the subject of cutting RD on molasses because they allowed duty-free access, so the government reduced RD in this budget, according to FBR officials.

The committee requested the FBR to present an EU letter to the committee because 12 units had been built to export it from the nation. The Senate panel also advised the government to boost the FED plus Rs 25 per pack on tier-1 cigarettes to produce an extra Rs 13 billion, while the FED plus Rs 15 per pack on tier-2 cigarettes should be hiked to create an extra Rs 50 billion. However, the Senate panel did not recommend anything against illicit cigarettes in their finalized suggestions.

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