Tuesday, August 16, 2022 9:58

Rejected tax reforms plan made part of Finance Bill

Tagged with: ,
Posted by on Monday, June 7, 2010, 18:54
This news item was posted in Business category and has 0 Comments so far .

ISLAMABAD: In a smart move, the government has incorporated into the Finance Bill 2010 a key presidential ordinance for harmonisation of taxes that lost its legal life on June 5 and whose extension for 120 days was rejected by parliament a day before the announcement of federal budget for being violative of the 18th Amendment.

On June 4, a government resolution in the National Assembly sought to extend the Finance (Amendment) Ordinance 2010, which is linked to plans for value-added tax, for a further 120 days beyond its expiration on Saturday to meet the requirement of a new constitutional provision.

Rejected tax reforms plan made part of Finance Bill
Rejected tax reforms plan made part of Finance Bill

But members of the opposition PML-N opposed the move on the grounds the government had not given sufficient notice and that the landmark 18th Amendment passed in April sought to discourage legislation by issuing ordinances, which must be later passed by both houses of parliament to become laws.

Budget documents reveal that the clauses of the proposed legislation have now been made part of the Finance Bill 2010 through 147 amendments to three taxation laws.These include 47 amendments to the Sales Tax Act of 1990, about 70 amendments to the Income Tax Ordinance, 2001 (XLIX of 2001) and 30 major amendments to the Federal Excise Act of 2005.

The amendments seek harmonisation of sales tax, income tax and federal excise taxes and integrating the service groups of more than 500 senior-level tax authorities into one Inland Revenue Service against their will.

A senior official of the Federal Board of Revenue described the move as ‘cheating parliament and an insult to parliamentarians’ for legalising an unconstitutional move in a secretive manner through the Finance Bill that had been rejected only a day earlier.

The government has now made the provisions of the ordinance part of the Finance Bill to meet a conditionality of the International Monetary Fund.

Minister for Labour and Manpower Syed Khurshid Shah had announced in the lower house that the government respected opposition’s point of view and announced that the bill was being deferred. The speaker agreed to the deferment.

The PML-N had said that introduction of the bill would send wrong signals about the empowerment of parliament through the 18th Amendment and strengthen those who called parliament a rubber-stamp body.

A constitutional clause in the 18th Amendment requires a National Assembly resolution for the extension of an ordinance similar to a money bill instead of the old practice of re-promulgation by the president.

The government had originally promulgated the Finance Ordinance (Ordinance XXII of 2009) on October 28, 2009 in the name of harmonisation of taxes, changing the nomenclature of tax authorities under the three tax statutes, viz. Sales Tax Act 1990, Federal Excise Act 2005 and Income Tax Ordinance 2001.

Under the same ordinance, the FBR had issued numerous notifications, whereby the officers of Income Tax department were given the territorial jurisdictions, changed nomenclatures and combined powers under the three taxes.

This was seen as a calculated attempt to not only comply with the International Monetary Fund and the World Bank conditions but also to bypass the proper legislative process by tabling a bill in parliament.

The issue of merger of taxes through creation of Inland Revenue Service by the Establishment Division in an order had remained under serious dispute before the debate on introduction of value added tax.

You can leave a response , or trackback from your own site .

No Responses to “Rejected tax reforms plan made part of Finance Bill”

Leave a Reply