Great! In latest news, the government has withdrawn FBRs powers to grant concessions and exemptions of duties/taxes through Statutory Regulatory Orders (SROs). The Economic Coordination Committee of the Cabinet has now been made the competent authority to grant any exemption or tax concession.
According to a report published in this newspaper, sources say that the FBR can raise the tax rates of federal levies, but cannot reduce tax rates. The changes will reportedly feature in the Presidential Taxes Amendment Ordinance.
This seems to be a step in the right direction. The cost of exemptions and concessions had increasing over time, and in fact had increased the most in the first fiscal year of the current regime (i.e. FY14). Looking ahead, and according to the IMFs structural benchmarks requirements, legislation is due to be passed by end-December 2015 to "permanently prohibit the practice of issuing SROs that grants exemptions and loopholes."
As per last IMF review, the government had said that their "plan for eliminating all designated SROs granting tax concessions and exemptions remains on track, with an expected yield of 1 to 1.5 percent of GDP over the period of three years."
Yet while taking away powers from the FBR is a step in the right direction, the fact that it will still be the ECC and not the parliament that will grant exemptions suggests that it isn't the best foot forward. This is simply because exemptions and concessions will still manage to bypass the parliament, when, in fact, it is the parliament that has been constitutionally tasked with the domain of federal taxes and matters thereof.
It is understandable that the PML-N may not want to go to the parliament for every regulatory change in relation to taxation. But there exists such a thing called the Standing Committee on Finance in the Parliament, or one of their dedicated sub-committees, which in fact, according to Dr Vaqar Ahmed of SDPI, boasts competent members who possess the capacity to deliberate on such issues.
This column hopes good sense will prevail soon, where exemptions and concessions are directed to the parliament instead being stamped by select few of the cabinet committee. There is something called transparency in democracy, isn it?
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