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Tarin defends tax arrest clause but vows improvement

ISLAMABAD: Finance Minister Shaukat Tarin Friday categorically dismissed the Senate’s demand to abolish the powers granted to the Federal Board of Revenue (FBR) in Finance Bill 2021 to arrest the non-taxpaying persons, saying “people worldwide get arrested for not paying taxes,” but assured the Senate that Section 203A inserted in Income Tax Ordinance 2001 would be “absolutely reformed.”

“This clause has been inserted as deterrent—it’s not that they [FBR] officials would simply walk in and arrest [tax defaulters] — but we should have this ability,” Tarin said in his winding up speech at the Senate. Chairman Sadiq Sanjrani presided over the sitting.

“As far as this arrest thing is concerned, we have, so far, received 15 million profiles of taxpayers—their electricity bills, phone bills, bank accounts and all that—if any taxpayer’s profile indicates that they should pay taxes, the FBR would not go after them because FBR would coerce them— harass them (into paying taxes). We are looking for third party involvement or relevant organisations of traders, doctors, bankers— that would convince them to pay taxes— but even then if they don’t, then, as a deterrent this clause has been inserted,” he said. Senate Standing Committee on Finance, Revenue and Economic Affairs has recommended abolishing the proposal that grants FBR officials the powers to arrest the non-taxpayers and has recommended removal of the inserted Section 203A in Income Tax Ordinance 2001 in Finance Bill 2021. Responding to Senate panel’s recommendation, the finance minister said, “Section 203 would be absolutely reformed. We are going to make it in a way whereby it is satisfactory to everybody because it has become a very big issue… I am not a professional FBR guy, so people should have little faith in me…”

Clearly indicating that the proposal to grant FBR the powers to arrest non-taxpayers would not be dropped from the Finance Bill 2021, Tarin addressed former chairman Senate Raza Rabbani from Pakistan People’s Party (PPP) and said “Raza Rabbani sahib you know…this happens everywhere in the world; people get arrested worldwide for not paying taxes…so let this deterrent be there…but exercising any such power [like arresting non-taxpayers] would follow very high-level scrutiny and due procedure…”

The finance minister mentioned the names of some foreign personalities who were arrested over tax-related issues including Leona Helmsley, Lester Piggot and Peter Graf.

“(1) An officer of Inland Revenue not below the rank of an Assistant Commissioner of Inland Revenue or any other officer of equal rank authorised by the Board in this behalf, who on the basis of material evidence has reason to believe that any person has committed offence of concealment of income or any offence warranting prosecution under this Ordinance, may cause arrest of such person,” the Section 203A reads.

The finance minister assured the Senate that treasury benches in National Assembly would “try to accept” its recommendations on the Finance Bill 2021.

Tarin said the International Monetary Fund (IMF) wanted imposition of new taxes of 700 billion rupees, including Rs 150 billion income tax, on the Pakistanis. “But I stood up to them and opposed it,” he said.

He said proposed sales tax on food items in the federal budget has been removed and proposed tax on machinery is being reviewed.

The government is taking steps to bring another 15 million people into the tax net, he said.

Meanwhile, 18 bills – 17 government’s and one private member’s – were moved in Senate Friday and were referred to the relevant standing committees. The government bills were: The National Vocational and Technical Training Commission (Amendment) Bill 2021, The Hyderabad Institute for Technical and Management Sciences Bill 2021, The National College of Arts Institute Bill 2021, The Pakistan Academy of Letters (Amendment) Bill 2021, The Loans for Agricultural, Commercial and Industrial Purposes (Amendment) Bill 2021, The Financial Institutions (Secured Transactions) (Amendment) Bill 2021, The SBP Banking Services Corporation (Amendment) Bill 2021, The Companies (Amendment) Bill 2021, The Corporate Restructuring Companies (Amendment) Bill 2021, Global Change Impact Studies Centre (Amendment) Bill 2021, The Protection of Communal Properties of Minorities (Amendment) Bill 2021, The Islamabad Capital Territory Charities Registration, Regulation and Facilitation Bill 2021, The COVID-19 (Prevention of Hoarding) Bill 2021, The Port Qasim Authority (Amendment) Bill 2021, The Pakistan National Shipping Corporation (Amendment) Bill 2021, The Gwadar Port Authority (Amendment) Bill 2021 and The Maritime Security Agency (Amendment) Bill 2021. Mustafa Nawaz Khokhar from PPP moved his private member bill: Al-Karam International Institute Bill 2021. Earlier, the House prayed for the martyred soldiers of the Frontier Corps in Sibi. Later, speaking on the floor of the House, Federal Minister for Railways Azam Khan Swati said, the government would fully support an inquiry into the death of former Senator Usman Khan Kakar. The Senate session has been prorogued.

Copyright Business Recorder, 2021

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