The finance ministry has decided to approach the government with a suggestion to bypass parliament in taking important decisions in accordance with assurances given to the International Monetary Fund. The matters include levying of reformed general sales tax, changes in the budget and imposing a flood tax.
The participants of the meeting, held at the finance ministry, were of the view that obtaining approval from parliament before implementing any major step would be a lengthy process that could displease the IMF.
The meeting, presided over by Finance Minister Dr Abdul Hafeez Sheikh, was attended by officials of the ministry and the Federal Board of Revenue. The finance secretary was out of the city.
It discussed implementation of the reformed GST from Oct 1 in accordance with a promise made to the IMF.
According to sources, two options for the enforcement of a revised budget, flood tax and reformed GST were debated — seeking the parliament’s approval or issuing ordinances.
Approval of the revised budget and the taxes through ordinances was termed more feasible and ‘hassle free’ compared to formal approval from parliament, the sources said.
They said the ordinances could be issued after Oct 8, after the current sessions of both houses of parliament were over.
The provincial finance ministers are arriving in the capital for two-day talks on the reformed GST scheduled from Monday.
“Almost all issues have been finalised and it is just a formality that all the provinces and the centre agree on the implementation of reformed GST,” Sindh Chief Minister’s Adviser Dr Kaiser Bengali said.
The finance ministry has decided that the reformed GST will be implemented in phases, starting with withdrawal of sales tax exemptions notified by the FBR to numerous sectors and items.
“The process of withdrawals will continue for several days to avoid a strong reaction from the business community,” sources in the FBR said, adding that amendments in the sales tax law would be made through ordinances.
The government has submitted an operational plan to the IMF for reducing the rising budget deficit, but the major changes made in the budget need approval of parliament.
However, the finance ministry meeting noted that laying the revised budget before parliament could trigger another round of controversies and the approval could be a time-consuming task.
While a stern reaction is expected from many quarters over the ‘flood tax’, the FBR has suggested that a cess be imposed for a limited period on all imports.
“Laying the proposal in parliament may ignite a debate on imposing tax on agricultural income and potential way to taxing the rich,” an FBR official said.
Sources said an ordinance might also be issued for imposing a 1.5 per cent flood disaster duty on non-essential imports.
The FBR estimates that the duty may generate up to Rs11 billion for helping the flood-affected people.