ISLAMABAD: In a significant development, the Senate Standing Committee on Finance has made pivotal decisions regarding tax reforms during its meeting in Islamabad. Chaired by PPP Senator Saleem Mandviwala, the committee rejected the federal government’s proposal to impose a 15% levy on property, which was slated to take effect from July 1. This decision marks a setback for the government’s effort to expand its revenue base through increased property taxes.
However, the senate committee did approve a recommendation to restrict foreign travel for non-filers of tax returns, aligning with efforts to bring more individuals into the tax net. Federal Board of Revenue (FBR) Chairman Zubair Tiwana informed the committee about a new provision in the Finance Bill concerning property purchases by late filers. He explained that late filers would face a tax rate set between those applicable to regular filers and non-filers, emphasizing that many individuals only file their returns when purchasing a property.
During the deliberations, Senator Mandviwalla argued against increasing taxes for late filers, suggesting their tax rate should be equivalent to non-filers. Conversely, Senator Anusha Rahman advocated for greater leniency towards filers and increased taxes on non-filers. The committee also rejected the proposal to extend tax exemptions for the erstwhile tribal areas in Khyber Pakhtunkhwa for another year, despite objections from various quarters.
The FBR chairman disclosed that there had been extensive debates on these matters within the cabinet, noting opposition from the International Monetary Fund (IMF) against extending tax exemptions to merged districts. Senator Mandviwalla highlighted industry concerns about concessions granted to tribal regions, warning against exacerbating existing problems.
Moreover, the committee approved the government’s proposal to increase taxes on the salaried class while rejecting a 15% Capital Gains Tax on property and the suggestion to send parliamentarians’ records to the National Database and Registration Authority (NADRA) for tax collection purposes.
Additionally, the committee gave the green light to impose a 75% withholding tax on mobile phones and internet use for non-filers, aimed at incentivizing tax compliance among users of these services.
These decisions underscore the committee’s balancing act between enhancing revenue measures and addressing concerns about the impact of tax policies on various sectors of society and the economy.
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