Senate body casts doubts on transparency in budget-making

ISLAMABAD: The budget-making exercise came under sharp criticism on Thursday from lawmakers of a Senate committee as they advised the government to secure prior parliament approvals on supplementary grants to make the process more transparent.

The members of the committee on finance, who met here under the chair of Senator Farooq H Naek, said some measures seemed to bypass the Parliament so all such steps needed to be changed.

The committee raised red flags about ascertaining names of those who would become beneficiary of amnesty scheme for construction sector because of paucity of given timeframe. It rejected the move for disclosures of names of donors for charitable organisations.

The committee also rejected luxury houses and farmhouses in Islamabad Capital Territory (ICT) as the Chairman of Senate Committee Farooq H Naek announced to write down strong worded note over this proposal.

FBR’s Adviser on Law tried to convince the chairman of the committee by arguing that the government had imposed Capital Value Tax, Iqra Surcharge, and mobile levy on such pattern.

However, the chairman of the committee snubbed the FBR’s legal adviser and declared that this proposal would be rejected in totality.

“We have proposed changes into Finance Bill to strengthen regulations for charitable entities in order to comply with FATF requirements” FBR’s Member Inland Revenue (Policy) Dr Hamid Ateeq Sarwar informed the Standing Committee on Finance.

The committee members raised serious questions when the construction package announced by the government, which was tabled before Senators to convert ordinance as part of Finance Act 2020-21.

The FBR’s Member IRS Operation informed the Senate panel that those who would register themselves with the FBR till December 31, 2020 could avail this scheme. The package allows to complete the construction work till September 30, 2022.

Senator Mussdiq Malik from PML (N) said Capital Gains Tax would not be charged from the owner of one house but this scheme seemed to benefit few big developers but there was nothing for those who wanted to construct few houses with limited money so this scheme was not meant to grant benefit to small and medium size businessmen.

“The scheme for construction sector shows that only those will benefit who are in pipeline and can complete mega construction projects within next two years” he said.

On issue of strengthening regulations against charitable and nonprofit organisations (NPOs), the FBR’s Member said that it was becoming a recurring phenomenon that every other commercial entity had started its own trust or charitable outfits and FATF asked Pakistan to place stringent regulations.

“The FBR proposed to bring down tax credit limits from 30 percent for individual and 20 percent companies to 15 percent and 10 percent respectively in the Finance Bill 2020-21,” the FBR official said.

Senator Taleh Mehmood objected to this proposal and argued that there was no justification to change the law because of 10 to 15 percent violators; why you were penalising good people in majority.

The Senate panel also decided to devise strategy to block such critical proposals in the budget 2020-21, while knowing that the recommendations sent out by the Upper House of Parliament were not binding on National Assembly to accept it for incorporating as part of the approved budget.