ByThe Senate Standing Committee on Finance and Revenue, led by Senator Saleem Mandviwalla, convened on Tuesday to review The Tax Laws (Amendment) Bill, 2024. The proposed legislation seeks to enhance tax collection systems and ensure equitable taxation based on income levels, as stated by Senator Muhammad Aurangzeb, Minister for Finance and Revenue.
A notable debate emerged when Senator Syed Shibli Faraz, Leader of the Opposition, questioned whether the bill should be classified as a “Money Bill” or an ordinary legislative bill. Raja Naeem Akbar, Secretary for Law and Justice, clarified that it qualifies as a Money Bill, referencing constitutional provisions under Articles 73(2) and 75.
Senator Faraz underscored the importance of rebuilding public trust in tax authorities, emphasizing that meaningful progress is unattainable without public confidence. In response, the Federal Finance Minister highlighted the government’s commitment to this goal through the “People Process Technology” initiative, designed to modernize tax administration. He also reassured the committee of the government’s sensitivity toward the salaried class, aiming to create a balanced approach across socioeconomic strata.
The bill proposes significant amendments to the Sales Tax Act, ICT (Tax on Services), Income Tax, and Federal Excise Duty. Chairman of the Federal Board of Revenue (FBR), Rashid Langrial, shared key statistics, revealing that only 42,000 out of 62,000 registered entities actively pay sales tax. He argued that evading sales tax is a graver ethical concern than income tax evasion and stressed that the amendments would strengthen sales tax compliance mechanisms.
Addressing the potential outcomes of the amendments, Senator Faraz sought clarification on how they would broaden the tax base. The FBR Chairman projected that the tax-to-GDP ratio could increase to 13% within four to five years, driven by improved revenues from sales tax, income tax, and customs duties.
While the committee thoroughly discussed the sales tax provisions of the bill, deliberations on income tax, ICT (Tax on Services), and Federal Excise Duty were postponed to the next meeting.
