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coronavirus
Coronavirus
VERY HIGH
Source: covid.gov.pk
Pakistan Deaths
29,077
1224hr
Pakistan Cases
1,360,019
6,54024hr
Sindh
520,415
Punjab
460,335
Balochistan
33,855
Islamabad
115,939
KPK
183,865

ISLAMABAD: Dr Muhammad Iqbal, a former member Tax Policy of the Federal Board of Revenue (FBR) said that Tax Laws (Second Amendment) Ordinance, 2021, which has withdrawn income tax exemptions, has been validly issued by the president, in line with the relevant articles of the Constitution.

On the other hand, some experts have also termed the Ordinance through which amendments have been made in the Tax Laws, primarily withdrawing various exemptions in the Income Tax Ordinance, 2001, as a violation of the Constitutional scheme.

The president on March 22, 2021, promulgated the Tax Laws (Second Amendment) Ordinance, 2021.

This ordinance was issued with immediate effect.

The Ordinance was also laid before the National Assembly to fulfill the constitutional requirements.

The opposition members of the National Assembly strongly criticised the Ordinance terming it “unconstitutional” on the basis of Article 73 of the Constitution, according to which all money bills have to originate in the National Assembly. However, the Ministry of Parliamentary Affairs had informed the National Assembly Standing Committee on Finance that the Ordinances issued are validly promulgated by the president because the president enjoys full mandate to promulgate Ordinances as per provisions of the Constitution of Pakistan.

The committee decided to summon the law minister, the attorney-general for Pakistan as well as the minister for parliamentary affairs, in the next meeting, on the matter of money bill through ordinance.

Talking to Business Recorder, Dr Muhammad Iqbal former FBR Member Policy stated that legislation by Ordinances is to be resorted in exceptional circumstances and whether or not the necessary circumstances exist for resort to this mode of legislation can only be determined by scrutiny of the relevant factors.

However, it is expected that the government will exercise due care and evaluate all the attending circumstances before opting for this mode of legislation.

Regarding the matter of constitutionality of promulgation of an Ordinance on subjects falling within the purview of a money bill, he asserted that “the criticism is not well founded”.

The Constitution itself provides an unequivocal answer to this controversy. He specifically referred to sub-clause (a)(i) of clause 2 of Article 89 of the Constitution, which confers the Ordinance making powers on the president and also regulates these powers.

This constitutional provision stipulates that an Ordinance

“(a) shall be laid (i) before the National Assembly if it contains provisions dealing with all or any of the matters specified in clause (2) of Article 73, and shall stand repealed at the expiration of 120 days from its promulgation or, if before the expiration of that period a resolution disapproving it is passed by the Assembly, upon the passing of that resolution:”

Dr Muhammad Iqbal explained that clause (2) of Article 73, referred to, in the above quoted clause, provides a list of matters that if dealt with in a bill or amendment shall give that amendment or bill the status of a money bill.

Thus, it becomes apparent that the framers of the Constitution envisaged and approved the promulgation of ordinances by the president on matters falling within the scope of money bills.

Otherwise, there was no need to make special provision for laying of such ordinances, their expiration after a given time period and even conferring powers on the National Assembly to disapprove the Ordinance before its expiry.

He stated that identical provisions have been incorporated in sub-clause (a)(ii) of the same clause 2 regarding Ordinances dealing with subjects other than those covered under the money bill with the difference that such Ordinances have to be laid before both houses of the Parliament and either house can disapprove of it before its expiry.

He stressed that the above analysis of the relevant Article of the Constitution is sufficient to settle the controversy.

He, however, also requested the critics of legislation by Ordinances to keep in mind that the perceived duality between the president and the parliament is also not real.

In fact, Article 50 of the Constitution clearly prescribes that the Majlis-e-Shoora (Parliament) of Pakistan consists of the president, the National Assembly, and the Senate of Pakistan.

He also pointed out that Ordinances were also issued by the previous governments to make amendments to tax laws and the criticism by the opposition members regarding the constitutionality of such legislations needed to be re-appraised.

The former member policy, after explaining the above constitutional position, stated that criticism of the specific changes brought about through the Ordinance is justified and withdrawal of certain exemptions did not make much economic sense.

Responding to the criticism of tax experts on the powers of the federal government to make changes in the tax structure especially tax exemptions, as being in violation of Article 77 of the Constitution that provides that tax can be levied only by the parliament, the former member

Policy explained that this criticism is based on misreading of the Article.

Article 77 provides that “No tax shall be levied for the purposes of the Federation except by or under the authority of Act of Majlis-e-Shoora (Parliament)”.

This Article by using the expression “under the authority of Act of Majlis-e-Shoora (Parliament)” clearly envisages delegation of powers by the parliament.

Parliament in its infinite wisdom has delegated powers under each tax law to the federal government.

Parliament can also withdraw these delegated powers through appropriate amendments in the enactments but the delegation of these powers is strictly within the constitutional and legal mandate.

He also explained that such delegated powers are available in tax laws of most of the countries and are essential for smooth running of tax administration and for providing prompt response to some emergency situations.

For instance, if the government faced with uncontrolled commodity prices wants to allow duty free imports as an emergency measure, the absence of any delegated powers to waive off duty and taxes on import and the necessity to move a bill in the Parliament will cause delays and will only enhance the misery of the masses. However, there can be no dispute as to the proposition that these powers should be used sparingly and only in appropriate cases and not in an arbitrary manner.

Copyright Business Recorder, 2021

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