Senate body discusses Riba-free economic system

Senate Standing Committee on Finance here on Wednesday discussed Riba-free economic system in Pakistan and pros and cons of the proposed amendment in Petroleum Products (Petroleum Levy) Ordinance, 1961, which imposed Petroleum Development Levy (PDL) at the rate of Rs 30 per liter on petroleum products.
To review the Finance Bill, 2018 here on Wednesday, the committee met with Farooq Hamid Naek in the chair to consider and finalize the recommendations on the budgetary measures.
Senator Siraj-ul-Haq Siraj recommended that immediate steps should be taken to abolish interest-based economic system and necessary legislation be made to introduce interest-free economic system in the country.
Minister of State for Finance Rana Afzal informed the committee that the government has already introduced Islamic Banking system which is showing success in the country. Islamic Banking system is growing faster than normal banking system with the alternate options available to the general public, he said.
Despite discussion, the committee could not finalize its proposal relating to the abolition of the Petroleum Development Levy (PDL). It was also recommended by the committee members that sales tax on petroleum products should not exceed 10 percent.
Most of the recommendations of senators, pertaining to Finance Bill 2018, submitted in the Senate Standing Committee on Finance were generic in nature as it was proposed to abolish the Petroleum Development Levy (PDL) which was fixed at Rs 30 per liter.
Senator Mushtaq Ahmad presented the recommendation on behalf of Senator Siraj-ul-Haq that the government should withdraw Rs 30 per liter petroleum development levy on petroleum products and sales tax should not be imposed more than 10 percent on the same and no further tax be imposed. Finance Ministry responded that it is not yet implemented but there has been tried to create a space in law as Rs 8-10 per liter has been applicable since 2009. However, the committee deferred the recommendations.
The committee recommended to double allocation for FATA as it would increase from Rs 24.5 billion to Rs 49 billion in the budget. It was also discussed to take steps for bringing FATA at par with parts of the country.
Senator Mohammad Ateeq Sheikh said that consumers of Rs 100 mobile card should be exempted from advance and withholding tax.
The committee agreed to the recommendation that the amount collected as tax on cigarettes should be spent in the health sector.
Senator Syed Muzafar Hussain Shah recommended that in order to encourage poultry sector, duties/ taxes on the poultry feed additives may be reduced from 17% to 7%. However the matter was deferred due to non-clarity from the Ministry of Food.
Shah further recommend that in order to protect the interests of the poultry sector, duties/ taxes on the veterinary vaccines be reduced from 18% to 10%. The Federal Board of Revenue (FBR) informed that there are different slabs and it already comes under slab of 11 percent.
Shah recommended that in order to protect the interests of the dairy and livestock sector, the tariff on import of machinery for processing of poultry/ dairy products be reduced from 17% to 7%. The FBR informed that it is already 7 percent.
Shah recommended that in order to protect the dairy sector, it is recommended that tariff on import of skimmed milk powder (SMP) be increased from 45% to 60%. The committee recommended increasing it to 50 percent.
Shah recommended that in order to encourage the livestock sector, the duties on import of high yielding dairy cows/ elite bulls be reduced from 11.5% to zero. The FBR informed that it is already zero percent for bull but is 3 percent for cow with the objective to promote local cow reproduction.
Shah further recommended for increasing regulatory duty on fish fillet and frozen fish from 45% to 60% and the committee agreed to the proposal. Shah recommended for introduction of interest-free loans for the installation of solar tube-wells for farmers owning up to 20 acres of land in order to encourage the use of solar energy, but the committee recommended it for 12.5 acres.
Senator Chaudhry Tanvir Khan recommended that for all businesspersons, membership of chamber of commerce should be made compulsory and for betterment of tax system, central business data record system should be made. The committee recommended that a chamber member should be a return filer. He further recommended that tax software should be made easy and in Urdu. Through improving the tax collection procedure, the government revenues should be increased. The committee agreed to the recommendation. He further recommended that steps should be taken for the encouragement of tax payers and first 5,000 tax payers should be given VIP citizen status and national events awards should be given. Province-wise members should be increased gradually. The committee agreed to the recommendation.
Import duty on the import of electric cars should be enhanced instead of reduction to promote local industry. The FBR maintained that such cars are not being imported.