FBR Chairman Faces Criticism Over Tax Increases and Punitive Measures for Non-Filers

Senate Standing Committee on Finance Reviews the Finance Bill 2024 Amidst Heated Debates and Industry Concerns

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ISLAMABAD – During Thursday’s Senate Standing Committee on Finance meeting, Federal Board of Revenue (FBR) Chairman Zubair Tiwana faced intense scrutiny over the proposed tax hikes and punitive measures for non-filers as the Finance Bill 2024 was reviewed.

Concerns Over Tax Hikes on Various Sectors

The committee deliberated on proposed tax increases affecting several sectors, including imported electric vehicles, cement, telecom, and beverages. Senators voiced concerns that sudden tax hikes could deter investment. Independent Senator Faisal Vawda was particularly vocal, accusing the government of adopting policies counterproductive to global trends that encourage electric vehicle adoption.

Clash Between Senator Vawda and FBR Chairman

A notable altercation occurred between Senator Vawda and Chairman Tiwana. Vawda, who is also in the business sector, insinuated insider influence over the tax decisions and threatened to expose the individuals responsible. He criticized the government for discouraging electric vehicle imports, contrasting with international practices.

Impact on Investments and Importers

Committee Chairman Saleem Mandviwalla and Senator Vawda highlighted that frequent policy changes negatively impact investor confidence. Vawda emphasized that the new policies would create additional challenges for importers. FBR officials clarified that the increased tax rate applied to imported luxury vehicles costing over Rs15 million, not locally manufactured cars, which face a 25% sales tax.

Automotive Industry’s Investment Concerns

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The CEO of Indus Motors informed the committee about significant investments of $100-150 million in hybrid and electric vehicle production under the auto policy 2021-26. He criticized the government for retracting incentives shortly after these investments were made, revealing that a vehicle priced at Rs22 million includes Rs13 million in taxes, with the actual cost being only Rs9 million.

SIM-Blocking Controversy

The committee also discussed the contentious issue of blocking SIM cards for non-filers, which telecom sector representatives argued was unfeasible. They noted that two telecom companies had already exited the market, leaving only three operators in Pakistan. The sector expressed dissatisfaction with advance tax collections and sales taxes on mobile handsets.

Cigarette Taxation Amendments

Detailed discussions were held on amendments to penalize retailers selling cigarette packs without proper tax stamps or labels. Proposals included imposing penalties and store closures, along with taxes on e-liquids and restrictions on selling new cigarette brand variants at reduced rates. The committee approved an 18% sales tax on nicotine pouches and debated taxes on electronic cigarette imports. Senator Vawda humorously admitted his own use of imported cigarettes, regardless of tax stamps.

Property Sector Taxation and Inflation Forecasts

The committee also addressed tax issues in the property sector and inflation projections for the upcoming financial year. While Chairman Tiwana expressed optimism about revenue growth, Senator Mandviwalla warned that higher taxes might exacerbate inflation.

The Finance Bill 2024 discussions highlighted significant contention between government officials and industry representatives. The committee’s deliberations underscored the challenges of balancing revenue generation with maintaining a conducive environment for investment and economic stability.

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