Islamabad, Dec 24: The Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, met on Tuesday to discuss the Tax Laws (Amendment) Bill, 2024, aimed at strengthening Pakistan’s tax collection system and ensuring fair taxation based on individuals’ income. Senator Muhammad Aurangzeb, the Minister for Finance and Revenue, emphasized that the bill would address crucial issues in the tax system to create a more equitable framework.
One of the key discussions during the meeting was initiated by Senator Syed Shibli Faraz, Leader of the Opposition, who raised the question of whether the bill should be classified as a “Money Bill” or an ordinary bill. In response, Raja Naeem Akbar, Secretary for Law and Justice, clarified that the bill should be treated as a Money Bill, citing relevant provisions in the Constitution of Pakistan, specifically Articles 73(2) and 75.
Senator Faraz also stressed the importance of restoring public confidence in tax authorities, arguing that meaningful progress could not be made without public trust. In response, Minister Aurangzeb assured that the government was committed to rebuilding this trust through initiatives like the “People Process Technology” program. He emphasized the government’s empathy towards the salaried class and reiterated efforts to create a balanced tax system that accounts for different socioeconomic groups.
The committee discussed various provisions of the bill, which includes amendments to the Sales Tax Act, Income Tax, ICT (Tax on Services), and Federal Excise Duty. Rashid Langrial, Chairman of the Federal Board of Revenue (FBR), shared that while there are 62,000 registered entities, only 42,000 are actively paying sales tax. He stressed that failing to pay sales tax is more unethical than income tax evasion, and the proposed amendments aim to improve sales tax collection mechanisms.
Senator Faraz raised concerns about the potential impact of these amendments on broadening the tax base. FBR Chairman Langrial predicted that the tax-to-GDP ratio could rise to approximately 13% over the next four to five years, primarily driven by increased revenues from sales tax, income tax, and customs duties.While the committee reviewed the sales tax clauses of the bill, discussions on income tax, ICT (Tax on Services), and Federal Excise Duty were deferred to a subsequent meeting.
