Senate body approves money bills

RECORDER REPORT

ISLAMABAD: Senate Standing Committee on Finance approved on Thursday two money bills moved by the government to generate Rs 38.390 billion during the current fiscal year through imposition of gas infrastructure development cess and petroleum levy on Liquefied Petroleum Gas (LPG).

The committee was initially widely divided on the qualification of the Petroleum Products (Petroleum Levy) Amendment Bill 2011 and Gas Infrastructure Development Cess Bill 2011 as money bill but eventually agreed after extensive discussion to consider and pass the proposed legislations as money bill with amendments to include schedule-II in the legislation to specify the gas development Cess rate.

Officials of the Ministry of Petroleum told the committee that Rs 34.390 billion has been estimated on account of cess tax from various sectors of the economy during the ongoing fiscal year. The imposition of cess would generate Rs 11.10 billion from fertilizer sector, Rs 110.87 billion from CNG station with 6.10 billion from CNG station in Region-I and Rs 5.77 billion from CNG station in Region-II.

On account of Cess, the government has estimated Rs 4.62 billion from Industrial Sector, Rs 5.88 billion from Independent Power Producers (IPPs), Rs 0.430 billion from Mari Gas Company Limited (MGCL) and Rs 0.460 billion from Pakistan Petroleum Limited (PPL) during the current fiscal year.

Secretary Finance Dr Waqar Masood said despite having huge reservoir of natural gas, Pakistan was utilising the asset in most inappropriate manner and had been giving it to various sectors on rates much lower than the international price. He said that domestic gas tariff was relatively low in Pakistan and fertilizer sector was heavily subsidized.

However, he did not agree to the members' proposal that revenue collected through the imposition of infrastructure development cess should not be used for price equalisation for other fuels and must be kept in a separate account to utilise for the purpose of gas infrastructure development Cess.

The Secretary Finance said that as per Constitution all the revenues would have to be deposited in the consolidated fund and resisted the demand for removal of clause in the bill seeking utilisation of cess for price equalisation of other alternative fuels.

The committee members' apprehension was that price equalisation for other fuels in the legislation would allow the government to utilise the cess for other purposes.

Senator Ishaq Dar also wanted the government to specify cess rate in the bill because according to him, the committee could not allow blanket approval for imposition of desirable cess rate.

Senator Professor Khurshid Ahmed said that the cess tax did not come under the money bill and the government was also seeking powers in the law to impose tax even through a notification that would be a violation of the Constitution because tax could only be imposed through legislation in the Parliament and not through notifications.

Sughra Iman of Pakistan People's Party said that levy and cess were synonymous of tax and distinction could not be drawn between the two. Thus by definition, the cess and levy were taxes and fall in the purview of money bill.

Later, talking to media, Petroleum Minister Dr Asim Hussain said that levy on LPG would generate Rs 4 billion during the current fiscal year.

The committee also recommended that the government should impose 4 percent in addition to three months KIBOR on the companies failing to collect Gas Infrastructure Development Cess.