Provisional collection of GST legal, constitutional, done every year: Ishaq Dar

ISLAMABAD: Finance Minister Ishaq Dar on Saturday made it clear that provisional collection of increased General Sales Taxes done under an Act of 1931 till June 30th is legal, constitutional and the previous governments resorted to the same practice every year.

During proceedings of the Senate, the Finance Minister made the clarification after PPP leader Raza Rabbani asked permission of Chairman Senate Nayyar Hussain Bukhari to move a motion against breach of privilege of members and Parliament over collection of increased General Sales Tax on petroleum products on orders of OGRA.

The Finance Minister said, "The provisional collection of taxes is not happening for the first time and it is legal and constitutional. Every year as the government proposes a tax or levy in the budget, the collection of tax starts immediately under a 1931 law for Provisional Collection of Taxes."

The Finance Minister said this practice was continuing since long as it was in public interest to collect taxes otherwise this money would go into the pockets of retailers, profiteers and hoarders who jack up prices the very next day and resort to artificial shortages. "This is an established practice and is even done in surrounding countries and in western countries."

However, he offered that if the opposition wanted to change the law on tax collection he was ready to go along with it. "I have offered an honourable way that we should sit together and find a way out. I am ready to be convinced. It does not send a positive message to ask for privilege motion for a thing which was done by the previous government in its five years," he added.

Referring to the financial woes of the country, he said fiscal deficit had risen to Rs 2000 billion and the public debt will rise to 14500 billion by next year.

Supporting the finance minister's position, Minister for Law Zahid Hamid said same declaration for provisional collection of taxes was signed and 1931 law was invoked by the previous government in 2008, 2009, 2010 and 2012.

"The collection of General Sales Tax was strictly in accordance with the law. This particular law may be struck down but it is present now and there is no question of privilege involved," he asserted.

Earlier Leader of the House Raja Zafarul Haq took the stance that the matter of collection of increased GST is sub judice and before the Supreme Court.

After hearing arguments from both sides of the aisle, the Chairman Senate referred the matter to the Standing Committee on Finance to decide about legality of provisional collection of taxes.