Duty on energy savers, free import of bullet-proof cars: Finance's attempt stymied

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (June 18 2009): The Cabinet in its meeting on June 13, 2009, is reported to have stymied Finance Ministry's attempt to impose customs duty on energy savers as well as give approval to import duty-free bullet-proof vehicles, to be used by investors, official sources told Business Recorder.

Another proposal, turned down by the Cabinet, was regarding production of National Tax Number (NTN) for obtaining commercial and industrial gas/electricity connections, and opening of bank accounts. Sources said that the Cabinet was divided over the slogan of the 2009-10 federal budget.

Prime Minister Yousaf Raza Gilani, who presided over the special Cabinet meeting, however, directed the Ministers not to criticise the budget, in public, but allowed them to talk, individually, to the media about their Ministries.

The Advisor to Prime Minister on Finance, Shaukat Tarin, who briefed the Cabinet members clause by clause, had adopted budget slogan as 'Revival of Economy with a Human Face', but Cabinet members described it as 'The Budget of Hope', rather than 'revival', sources said.

They said that Tarin gave briefing on the state of the economy and the challenges, which conditioned the formulation of the budget. It was explained that the thrust of the budget was to build upon the achievements of the present government with respect to macroeconomic stabilisation during 2008-09.

Analytical comparison of the budget with the previous one was a component of the budget speech delivered by the Minister of State for Finance, Hina Rabbani Khar. It highlighted that stabilisation was the objective; subsidies for non-productive sectors had been discontinued; and expansion in revenue base was targeted. According to the Advisor, focus would be placed on agriculture, industrial competitiveness and creation of job opportunities.

Sources said that when the budget proposals came under discussion, some Ministers pointed out that the public would be unduly burdened due to the losses incurred by inefficient discos. It was suggested that compressed natural gas (CNG) and clean fuels should be encouraged and 'carbon surcharge' targeted to contribute to mitigation of pollution. It was also mentioned that some proposals, given by Ministries, had not been accommodated in the budget.

Some Ministers expressed apprehension that levy of excise duty would ultimately affect the common man. Similarly, withdrawal of subsidies on power consumption was likely to create difficulties for consumers of Karachi Electric Supply Corporation (KESC).

The condition of NTN for opening of bank account/utilities connection and levy of Swat, Buner displaced persons (IDPs) tax were not favoured by some Cabinet members. It was suggested that Railways should be supported to augment its capacity to generate income. According to sources, Minister for Food and Agriculture, Nazar Muhammad Gondal, pointed out that the budget did not promise much for the farmers.

Minister for Industries and Production recommended that measures should be taken to reduce the price of locally manufactured bicycle and rickshaw. Some Cabinet members proposed that income of State Bank of Pakistan (SBP) should be subjected to income tax.

"Federal excise duty has been reduced in the case of locally manufactured vehicles, but on the locally manufactured energy savers it has been increased," sources quoted one of the Ministers as complaining in the meeting. The Cabinet strongly felt that the trend of 'indirect legislation', through Finance Bill, was not a healthy parliamentary practice.

It was also said that increase in capital value tax (CVT) on property did not entail expansion in the tax net: it had just amounted to extra burden on existing the taxpayers.

The Prime Minister, while wrapping up the debate, said that it was the collective responsibility of the Cabinet to project the budget and the achievements of the government among the people. The Cabinet decided that only such legislation would be incorporated in the Finance Bill as was directly related to budgetary/fiscal matters, and was covered under the provision and spirit of the Constitution.

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