Pakistan: Federal Govt accused of giving away Rs 104 billion tax exemptions to ”powerful” businessmen

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The opposition in Senate Tuesday rejected the federal budget, saying it was influenced by the International Monetary Fund (IMF). Opening the debate on the federal budget 2014-15, Pakistan People”s Party (PPP) leader Mian Raza Rabbani said the SRO regime is not being allowed to be done away with by influential lobbies, crony capitalists and big businesshouses who avail exemptions but do not pay taxes.

He said the incumbent government, which promised to phase out the SRO regime over a period of three years, had issued over 90 SROs in the first nine months [July to March] of the current fiscal year to benefit influential people. He said SROs are notified in violation of Article 162 of the Constitution. He referred to a study, according to which a yearly tax exemption of Rs 478 billion has been given to influential people while the amount could be utilised to generate 1700 MW electricity. Within the first six months in power, he said, the incumbent government has given away Rs 104 billion tax exemptions to powerful businessmen. He said that till February 2014, the government allowed customs duty exemptions of Rs 92 billion, Rs 7.3 billion worth of sales tax and Rs 2.4 billion income tax; and all these exemptions were given through SROs to powerful business lobbies. Rabbani said the partial exemptions on sugar loan ranging from Rs 10 billion and Rs 20 billion were given to benefit a handful “cronies.” He said the customs exemptions are estimated at Rs 136 billion while other exemptions cost the national exchequer around Rs 96 billion; these were mostly for the influential businessmen, manufacturers, vendors of automobiles, export companies specific items, conditional import of raw material and components.

He said the tax exemptions enjoyed by industrialists, feudal lords and companies rose by a staggering 99 percent during this fiscal year at a time when the FBR witnessed a shortfall of Rs 2 billion in revenue collection. He also opposed a 10 percent decrease in duty on 1800cc vehicles manufactured in the country, saying that the step has been taken to benefit a particular business house.

He said the IPPs were given income tax exemptions of Rs 52.03 billion during the current fiscal year as compared to the last year”s Rs 48.6 billion, showing an increase of Rs 3.43 billion. Referring to the issue of circular debt, Rabbani said the circular debt has re-emerged and a ”crony capitalist” who owns a particular IPP has threatened the Ministry of Water and Power through a letter asking the ministry to release Rs 3 billion or face 12- to 14-hour loadshedding.

He said circular debt, is once again hovering around Rs 300 billion. He said the government has borrowed Rs 31 billion from commercial banks to clear circular debts but loadshedding continues for 15 hours in urban and 20 hours in the rural areas. Referring to supplementary grants, he said the government is seeking approval of unprecedentedly high supplementary expenditures for the current financial year because of huge expenditure overruns and diversions of higher budget debt servicing.

He pointed out that Rs 1.54 billion supplementary expenditures were made by the cabinet division to purchase two BMW 76 Li high security sedans and appropriate security apparatus for the VIP and to train IB officials. Similarly, he said that Rs 69 million is being sought for the garden of the Prime Minster”s Secretariat. He also questioned the amount of Rs 1.4 billion to be utilised for donation to Sultana Foundation on the advertisements, publicity, video conferencing facility and rent of residential buildings. Furthermore, he claimed that Rs 195 million was spent on the purchase of six sniffer dogs for security at Prime Minister”s House.

He said that the royals of the UAE and Qatar have been exempted from import duties on all items including vehicles which they would bring to Pakistan for different projects. Earlier, the combined opposition including PPP, MQM and ANP staged a walkout from the house against what they felt that the government was not paying any heed to the Upper House. Before initiating a debate, Rabbani said that no minister was present in the house for taking notes of the budget debate. “The government is not giving any importance to the debate of the house and we are going to stage a walkout unless the ministers ensure their presence,” Rabbani said while leading a walk out. ANP senator Zahid Khan while speaking on a point of order said that instead of initiating a debate on the budget the house should start a debate on Karachi situation where militants are playing havoc with the lives of people. MQM”s Colonel Tahir Hussain Mashhadi (Retd) said that Karachi has been left at the mercy of militants where Taliban have established their camps with the support of the banned sectarian outfits while the government is reluctant to launch a decisive crackdown against terrorists