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ISLAMABAD, Jan 30 (APP):The Senate Standing Committee on Finance and Revenue on Thursday briefed on Pakistan’s current revenue shortfall of Rs 384 billion for the first half of the fiscal year.
The Senate Standing Committee on Finance and Revenue convened at Parliament House under the chairmanship of Senator Saleem Mandviwala.
The session, which was attended by Senators Sherry Rahman, Manzoor Ahmed, Syed Shibli Faraz, Faisal Vawda, Farooq Hamid Naek, Mohsin Aziz, and Minister for Finance and Revenue, Mr. Muhammad Aurangzeb, discussed several key issues related to fiscal policies, the performance of the Federal Board of Revenue (FBR), and controversial procurement practices.
During the meeting, a significant portion of the meeting centered around the ongoing training programs for FBR officers, which have been in place for over 20 years.
The FBR collected Rs 5,624 billion in taxes, falling short of the targeted Rs 6,008 billion. The tax-to-GDP ratio has risen to 10.8% in the second quarter, up from 9.5% in the first quarter, although it remains below the IMF-agreed target of 13.6% by the end of the program. By comparison, India’s tax-to-GDP ratio stands at 18%.
Senator Saleem Mandviwala questioned the effectiveness of these training programs, asking, “What has been achieved from the training provided to FBR officers.”
The committee sought detailed information on the outcomes of these programs, and Secretary Finance Imdadullah Bosal assured that comprehensive details would be provided to the committee.
Senator Mandviwala expressed concerns over FBR’s handling of sales tax collection, stating, *“Many times, we have asked the FBR to collect sales tax on goods, but the people of FBR opposed it.”
Finance Minister Muhammad Aurangzeb responded by highlighting ongoing reforms, including a move to simplify income tax forms for salaried individuals and a push for transparency in tax collection through technological innovations like the faceless system in Customs.
He also discussed the government’s intention to separate tax policy from FBR operations in the next financial year, aiming to ease the burden on the salaried class. “We are taking steps to keep the tax form simple and easy,” he added, noting that 60-70% of employees are not subject to the super tax.
Senator Faisal Vawda raised questions about the procurement process of 1,010 vehicles by FBR, to which Chairman FBR Muhammad Aurangzeb pledged a high-level inquiry into the matter. He announced that procurement process would be halted till the full review of the process.
Senator Mandviwala stressed the importance of transparency in the procurement process and called for the PEPRA Board to review the vehicle purchases in line with procurement rules. “Procurement cannot be done without PEPRA rules,”he stated.
The committee also discussed the possibility of converting certain taxes into a carbon tax, a proposal raised by Senator Sherry Rahman. While the finance minister acknowledged the World Bank’s Country Partnership Framework, which includes climate and carbon concerns, some members, including Senator Farooq H. Naik, raised concerns about the impact of a carbon tax on inflation and its effect on the poor.
Finance Minister Aurangzeb clarified that gas prices for the Captive Power Plant had been reduced to Rs. 3,500, and that 1,100 out of 5,600 industrial units had expanded their operations in the last year. The committee also stressed the need for reforms to reduce the administrative burden on taxpayers, while ensuring that tax collection remains efficient and fair.The committee recommended to send several matters, including the vehicle procurement issue, to the FIA.