ISLAMABAD: Members of the Senate Standing Committee on Finance on Tuesday voiced strong opposition to several tax measures proposed in the federal budget, particularly the 18% sales tax on imported solar panels and new taxes on small vehicles. The meeting, chaired by Senator Saleem Mandviwala, saw heated debate over the budget’s impact on ordinary citizens and Pakistan’s green energy goals.
A key issue discussed was the imposition of General Sales Tax (GST) in the merged tribal areas (FATA and PATA). Senator Mohsin Aziz criticized the government’s shifting stance on the issue, insisting that if a tax is to be applied in FATA, it should be maintained consistently rather than withdrawn under political pressure.
“There’s a clear lack of commitment. People mock us, saying this tax will be reversed again,” Aziz said, urging the finance minister to uphold a firm and stable policy. He referred to previous proposals — including a 12% rate suggested by a committee led by Rana Sanaullah — which were later reduced or scrapped without explanation. “If anything, the tax should be increased, not rolled back,” he added.
FBR officials provided a detailed timeline of the tax decisions relating to the region, but focus quickly shifted to the new 18% tax on solar panel imports — a move that drew sharp criticism from across party lines.
Senator Mandviwala, along with Senators Ahmed Khan and Zarqa Suhrawardy, demanded the tax be immediately reversed, arguing it undermines the country’s renewable energy push.
“This is nothing short of greenwashing,” said Suhrawardy. “You can’t impose a carbon levy on petrol and then tax solar panels. It contradicts everything we’re trying to achieve with climate goals.”
Senator Ahmed Khan added that the timing of the tax had enabled some importers to benefit unfairly: “They brought in solar panels before the budget and will now sell them at inflated prices.”
Several members also questioned the influence of Independent Power Producers (IPPs), suggesting the tax may have been introduced to protect their interests at the expense of clean energy initiatives.
The committee further scrutinized tax exemptions given to Pakistan International Airlines (PIA) for leasing new aircraft. Senator Mandviwala criticized the selective relief, saying it should be extended to all airlines to avoid legal and financial imbalances. However, the FBR chairman defended the policy, stating that leased aircraft qualify as capital goods and the exemption is intended to support PIA’s restructuring.
Tax hikes on small vehicles also sparked objections. Senator Shibli Faraz highlighted the contradiction of offering tax relief in FATA and PATA while burdening small car owners elsewhere. Senator Abdul Qadir suggested that any vehicle taxes be introduced in phases, similar to the gradual approach taken in tribal regions.
Finance Minister Muhammad Aurangzeb briefed the committee on proposed amendments to laws governing tax fraud arrests. He announced four key changes, as directed by the Prime Minister:
- Arrests will require approval from a panel of three Grade-21 officers, instead of a single commissioner.
- The arrest can only proceed if the committee reaches a consensus.
- A minimum fraud threshold of Rs50 million has been set.
- Suspects must receive three formal notices before any arrest is initiated.
The 18% sales tax on solar panels remains one of the most controversial elements of the budget. On June 14, Sindh Chief Minister Murad Ali Shah warned that the PPP would not support the federal budget if the solar tax was not withdrawn, stating: “We strongly oppose the imposition of any such tax.”
The committee will continue discussions as budget negotiations advance in the coming days.
